PROLOGUE

© Raúl Diez Canseco Terry

First edition: January 2020

© of this edition San Ignacio de Loyola University Fondo Editorial Calle Toulon 330, La Molina he end of the first decade of the new twenty-first Phone number: (+51) 3171000, anex 3705 century shakes the world with accelerated and complex changes, in which the trade war between Director: José Valdizán Ayala T Editor: Rafael Felices Taboada world powers pales in comparison to the first glimpses of Design and layout: Sergio Pastor Segura the technological war by the end of 2019: a war of drones, an asymmetrical one, in which the powers of the world are Coordinator: María Olivera Cano realigned. A war that no one wants and that everyone fears. English translation: Daniela Jarufe Latin America, without much participation on the world Hecho el Depósito Legal en la Biblioteca Nacional del Perú stage of this war, is going through its own skirmishes of Nº 2020-01640 low or medium intensity. Shaken by social phenomena, the region turns on a warning light with outraged, connected The photographs were downloaded from https://unsplash.com/. and violent citizens in countries such as Chile, Ecuador, PRINTING Bolivia, and Colombia, our neighbors. Publicaciones USIL Av. Paul Poblet Lind s/n, Sub Lote B, Parcela 1, Fundo Carolina, The gap between economic growth for some, on one hand, Pachacámac. and economic and social inequality and inequity for others, on the other hand, was the element that triggered the social February 2020 conflicts. As observed by Tocqueville, the peoples rise up 500 copies of this book were printed. in rebellion because of those who demand more than they were given, and less due to a feeling of extreme injustice. The total or partial reproduction of this book by any means is strictly prohibited without the explicit permission of the Fondo Editorial. Until not too long ago, Latin America was the region bet on looking at things from a different perspective. We where the middle class, which is a product of more can find a silver lining in every crisis. This is what happened than 30 years of tax adjustment programs and financial when we were affected by the El Niño phenomenon in ’97 discipline, had grown the most. Every one welcomed this – ’98. Uncontrollable downpours caused rivers to overflow new middle class that widened the service industry and and wiped out farmlands. However, they created huge the commerce, but that lived and still lives off credit, that lakes where there were fish that people could consume, has to use transport services with a modern infrastructure and as these new lakes dried, the humid soil allowed them but with a pre-modern service, that have a precarious job to sow new crops. Nothing lasts forever. and bills to pay at the end of the month that threaten their economic and emotional tranquility. This book is, in that sense, an optimistic outlook on the complicated world we have to live in. A time period that Soon, these new middle classes got tired of living on the anthropologists are starting to call Anthropocene, an edge and went out on the streets to shout their discontent age in which the Earth and its life conditions change in different tones. Not all can be explained through an due to the actions (and lack thereof) of mankind: global economic point of view. In countries such as Venezuela and warming, environmental imbalance, the deglaciation Bolivia, it was politics that failed. Warlord-like presidents of our mountains, the scarcity of water, the precarious forced their hold on power by any means they could. One biodiversity, the disappearance of many species. At of them still remains in his bubble of illusion. the same time, there have never been larger advances in science and technology: in robotics and artificial We grew, we voted, but not all of us in the same proportion. intelligence, in biotechnology and human genome. In this scenario, one of change, bad blood and modernity, of both technologic and social connectivity, both private This is the new world of the new generations of Peruvians. companies and governments, particularly in our region, We must give them a better place than the one in which are obliged to be efficient and effective. The inefficiency of we have had to live. That must be our main responsibility, the public sector creates an economic backwardness and both in our private life and in the life we, circumstantially, social dissatisfaction. These two elements, when together, lead in the public sector. cause discouragement, discontent and, in extreme cases, distrust. This is the worst that could happen to us both as For the past 30 years, poverty has decreased in our a region and as a country. country. We need to continue to do this; if we don’t, we will be putting the new generations at risk, generations In the long run, the phenomena of discontent and distrust that year after year see their desire to insert themselves in affect the democratic system. This is why I permanently the labor market frustrated. Three hundred thousand new young people join the ranks of the economically active sector. Managing this new scientific knowledge will allow, population every year. How are we going to absorb them? at the same time, the development of research centers and new market niches that will not only aim for the internal The first task of the pilot who governs the ship wecall market, but also for every region in the world. Peru must, therefore, abandon the autopilot and actually make the decisions that the emergency situation During my travels around Peru, I have seen the direct effects demands. Peru’s economic growth must be seen through a caused by the El Niño phenomenon and the impossibility multidimensional approach, with indicators that are aligned of our authorities – local, regional and national – to face to social and institutional goals, which improvement is vital them. We talk a lot about reconstruction, and we offer for maintaining a healthy, sustainable country growth. This alternatives to mitigate the devastating effects El Niño on is what happens if we establish clear goals for the health, the infrastructure, on the agriculture, but we do not talk education and infrastructure areas. about making decisions that will decrease its negative effects in the future. We have many opportunities to continue growing. Mining contributes to national development. Agriculture, The weather phenomenon – the rivers swelling, the in its agro-export version, has become a job generating downpours, the floods – are a cyclic, recurrent reality. We opportunity. Both sectors are not irreconcilable. Our agro- know that, in some years, we will have these weather biodiversity makes us a world pantry and laboratory, with anomalies again, and that they will become more and more one of the most valuable natural and cultural patrimonies. frequent. What we need, then, is to have a climate change Cultural and ethnic diversity gives us valuable ancient authority; a high-ranking official with power who does not knowledge about the appropriate uses and properties of only work on reconstructing, but also on preventing. the genetic resources and species of both flora and fauna. We are a very diverse country; one of the 12 countries in This very rich ecosystem, genetic and biological patrimony the world with 70% of the planet’s biodiversity. We can opens a window of opportunities for new economic fields, produce virtually anything during the whole year, while, in such as eco-innovation, bio-commerce eco-tourism, cuisine other places, due to climate related reasons, they cannot. and the powerful cultural and entertainment industry. These climate characteristics put us in an advantageous situation compared to Europe, North America, China, In order to highlight all that economic potential, we need Russia and other regions of the world. several things: from the restructuration of our educational model, developing a critical and productive thinking in our Our Amazon rainforest is a living laboratory in which we children, to the purposeful investment in research and can install research and development facilities, placing development policies, from both the public and the private ourselves at the forefront of biotechnology and genetic engineering. We can transform the natural resources and were not activated that easily, and that can also make the give them an added value; create and chain specialized creation of productive knowledge easier. and highly productive clusters through production and development centers and technological institutes in Peruvian education in the year 2050 must allow as many different regions of the country. Peruvians as possible to generate productive, complex and sophisticated knowledge so they can create a better The tool that will best allow us to walk through the quality of life for themselves and for our country. This is path of success, of growth with innovation, is education. what I call entrepreneurial education. Humanity has achieved things that, not too long ago, seemed unthinkable. Little by little, science fiction is According to UN data, half of the world population is becoming just science. Our lives have become easier and under 30 years old, and 26% is under 15 years old. This more prosperous thanks to a large amount of small feats of generation was born after 1986 in a new world: the world crucial importance. During the last two centuries, there has of Facebook, of cellphones and of the internet. For these been an expansion of “productive knowledge”, meaning boys and girls, the access to education may signify a the knowledge that is used to make the products that bridge to the future, but not having such access may also we use. However, this expansion was not an individual become a great obstacle. phenomenon: it was a collective one. In Peru, 27% of the population is young. They are facing The most efficient way in which a modern society can an educational system that we must change, replacing accumulate large amounts of productive knowledge is repetition with creativity and innovation. Every country through the distribution of its fragments between its now needs smart individuals who can think critically and many members. Nevertheless, in order to be used, this are able to use technology. knowledge has to be reintegrated to the organizations. However, there are some barriers. The student census Modern societies are wiser and they thrive not because shows that, when young people are asked about what their citizens are individually brilliant, but because these they will do with their lives, only 35% answers that they societies altogether unite diverse types of knowledge that can intend to pursue a higher education, which means that the also be combined to create better, more intelligent products. remaining 65%, due to different reasons, will only access Accumulating productive knowledge is hard. It is, for the secondary education (MINEDU, 2016). most part, not available in books or online. It is engrained The facts that only 14% of high school students in the brain and in some of its more abstract processes. understands what they read and that barely 12% can Thanks to the interaction with digital technology, today solve math problems are also worrisome. In spite of those we are able to stimulate mental processes that, before, problems, the labor world continues to quickly change with renewable resources - hydroelectric, wind, solar and and transform, and young people are facing the Fourth geothermal energy, biomass – and has 30% of its territory Industrial Revolution, which mixes the physical, the digital protected as a natural terrain. Seeing biodiversity as a and the biological. resource associated to research, but also to tourism. We have to go beyond historic and archeologic tourism and The Fourth Industrial Revolution gives unlimited open new paths towards culinary, adventure, natural life, possibilities to millions of people connected to cellphones medical, entertainment and great show tourism. with processing power, storing capability and access to knowledge. These possibilities will be multiplied by flares of The time of the future is today, and its speed is exponential. emergent technology in fields such as artificial intelligence, There is no time to waste. Dreaming with a more prosperous robotics, the internet of things, autonomous vehicles, society entails calling the most capable people, with no 3D printing, nanotechnology, biotechnology, science political or any other type of distinction. Because Peru is materials, energy storing, and quantum computation. not just a problem; it is also an opportunity.

We must shape young people for work but, fundamentally, Raúl Diez Canseco Terry for life. It is in everyday life where the way we are and the way we relate to others resides. Work dignifies human beings, but the human dimension is based, besides work, on values, trust and knowledge. To sum up, education must serve the empowerment of the individual and their transformation into an agent of change.

Why not think about a dual education, as they do in Germany, in which two thirds of all young people who graduate high school choose the type of higher education that prepares them for a technical career. Besides being prepared for work and receiving health insurance, they also take complementary language or social sciences lessons.

We have to learn how to see the world from a different perspective, using our resources and highlighting them, like Costa Rica, which produces almost 93% of its electricity INDEX

I. Today’s world 17 II. Is globalization the mother of all woes? 33 III. Digital economy 55 IV. Work in the virtual world 73 V. Human talent 87 VI. Peru of the bicentenary 111 VII. A country of entrepreneurs 137 VIII. Starting up, always starting up 169 IX. The Peru we want 209 I TODAY’S WORLD

Raúl Diez Canseco Terry Peru: land of opportunities he beginning of the twenty-first century was the peak of the golden age of modern globalization, T carefully constructed throughout the twentieth century, overcoming the Great Depression and the Second World War. In spite of the Asian crisis of 1997-1998, and of other financial crisis in emergent countries, globalization intensified so strongly in the ’90 that for Fukuyama it meant the end of history.

The decade that preceded the great crisis of 2008- 2009 was, in many ways, a golden age of contemporary economy. The commerce of goods and services and the flows of capital across borders grew to reach unprecedented levels. Also, it was the start of a process of economic convergence between developed, emergent and developing economies.

For over 100 years, the group of developed countries – led by United States, Western Europe and Japan – had consistently generated 60% of the world production. It seemed as if the large contributions these groups of nations

Peru: land of opportunities 19 made would forever be. Their economic superiority was that, 47% of the richest people in the world were in the not affected by the industrialization of the Soviet Union or United States, with 222 moguls. by the upturn of some Asian countries. In the beginning of the twenty-first century, the United In 1950, the contribution of advanced countries to the States consolidated its place as a world leader, although world GDP was 62% in terms of purchase power parity Japan, in spite of the financial difficulties it had in the and 22% in terms of world population. Four decades later, previous decade, was challenging its might, and China that contribution to the global production was the same, was quickly making its way up. However, this country was even as the population of those territories had dropped still a mystery because its population – approximately 1.3 and become only a 15% of the entire world’s population. billion people – longed for a change in the political system. In fact, the countries that represented the majority of For many, what they did or didn’t do would determine the the world’s population seemed doomed to a minimal future of humanity. contribution to the global GDP. As computing and telecommunications became There is no doubt that this was the century of the United cheaper and more powerful, like the already low costs States. The strongest economy and the communication for transportation and the decrease of obstacles for revolution changed forever the habits of humankind. commerce across borders, the dispersion of production The colossus of the north invented the phone and mass in internationalized supply chains became economically entertainment. The radio and then the television invaded attractive and, in many cases, it ended up becoming the the homes. Advertising and consumerism appeared. only way to remain competitive.

By the end of the last century, according to Fortune This geographical segmentation of production, based Magazine, a publication that specializes in the analysis of on incessant flows of investment, technologies, finances business corporations’ performance, the largest and most and transports, personal experience, high efficiency admired one could be found: Walmart, which yearly sales information and logistical services, was possible thanks to were 240 billion dollars and which business dynamism the speed and reliability and profitability of the information employed 300 thousand people. The richest man in the technologies (IT). world was also in Uncle Sam’s country. According to Forbes – a publication which measures personal wealth -, The consequences of this transformation in the internal Bill Gates, the chairman of Microsoft, is the magnate who’s division of labor have been diverse. On one hand, patrimony was estimated at almost 41 billion dollars by companies from developed countries can now combine the end of 2003 (today he is worth 110 billion). On top of their most advanced technologies with a low cost work

20 Raúl Diez Canseco Terry Peru: land of opportunities 21 force in order to increase their competitiveness. On the On the international trade front, the comparative advantage other, developing countries that are entering the supply of the countries is less and less linked to the finished change can become industrialized more quickly, although products or the raw materials, and more and more linked they lack the strong industrial foundation that used to be to the specific tasks that form the industrial, commercial necessary. and financial processes that are necessary to manufacture and distribute the goods that the consumers demand. The dynamic of these economies drives, for example, Nike What is interesting is that the services or tasks that take – the giant that sells sports items – to not have a physical place before or after the manufacturing itself are today an plant anywhere in the world. This company doesn’t pay the important part of the value. This is called the smile curve. workers directly either. Their designers in the United States send the models to workshops in Asia, to whom they buy Every product sold at the end of a supply chain is the their production with all the commercial advantages that result of a conjunction of capital, work force, technology, this implies. Furthermore, during the last few years, Nike infrastructure, finances and commercial transactions of stopped working with factories in countries where the many countries. This has led to a deep transformation in wages had increased and moved their orders other places the way we see, study and measure the evolution of global in Asia such as China, Indonesia and Thailand, where the economy. value of work is lower, and workers’ rights are flexible. Technological progress has not only produced a Another case is Disney. Some of the action figures fundamental change in the production and marketing associated to their movies, with which kids play, are made patterns, but also a redistribution of the economic power in countries such as Haiti, where the average wage is 2 all over the world. The same happened already during the dollars a day. We conclude that the cost factor is decisive Industrial Revolution. In only a few decades there was a when focalizing the production of a good and competing. great displacement and a concentration of economic power in a few countries, and those who knew how to better The new organization of production – boosted by the navigate the new rules of the game became advanced in internet and other IT tools – is not the exclusive domain the nineteenth century and even in the twentieth century. of great corporations. Internet has been boosting transformations that encompass every value chain in In the current economic rearrangement, many developing almost every sector and in companies of almost every countries have reached an economic growth rate that is type. In fact, its impact has been more significant in micro higher than that of a rich country, but the case of Chine and small businesses and in startups. Currently, a small stands out. Thanks to the elevation of the average growth company can have a global reach from its creation. rate of its GDP for more than two decades, it has been

22 Raúl Diez Canseco Terry Peru: land of opportunities 23 The G-20 summit in Buenos Aires was the thirteenth meeting of the highest level of representation of the G-20, which corresponds to the heads of state. The final document was signed by all the members on December 1 under the title “Building Consensus for Fair and Sustainable Development” and includes thirty- one items regarding international trade, climate change and the protection of the environment, technological change and the fight against corruption, as well as educational, health, gender equality and work protection goals. ten years since China became the second largest world processes in a small number of countries. For its part, economy when, in 1990, it was the tenth. international trade consisted in the sale of goods produced in one country to clients that were in another country: this Now, since the first decade of this century, emerging or means that it was, in practice, bilateral commerce. developing countries are responsible for more than half of the world production. In spite of the fact that the per Already in the eve of the financial crisis of 2007 and capita income is still substantially higher in rich countries, 2008, China was the second largest world importer of that historical gap has decreased significantly. goods, the third importer of commercial services with the biggest growth, and the main receptor of the largest There are two evidences explaining the closing of this gap. flows of foreign direct investments (FDI), even surpassing On one hand, the group of rich countries has registered the net flows that enter the United States. China’s growth a slower growth and, on the other, the acceleration of accelerated the new production pattern and international the growth of developing countries has increased. This trade, thus creating unprecedented opportunities for acceleration has been boosted by the countries that, other developing countries, which also allowed developed after being closed economies for many decades, started nations to have new and wider trade channels for their making efforts during the ’80s to become part of the global products, investments and technologies. economy. The expansion of the economy helped millions of people Thus, in less than a quarter of a century, a group of developing to overcome extreme poverty. Even though Latin America countries – that have more than 55% of the world’s registered the highest rates of growth in history, the region population – doubled their GDP and opened themselves remains the most unequal in the world according to the to foreign direct investments (FDI), with which they United Nations Economic Commission for Latin America managed to increase their GDP per capita twice as fast as and the Caribbean. That growth allowed the expansion of rich countries’. The most important part is that, in spite of the global savings reserves and contributed to the loosening demographic growth, both the number and the proportion of financial restrictions, particularly for the United States. of inhabitants living in extreme poverty decreased. Paradoxically, this aspect of Chinese success was, in part, what led to the financial crisis, caused by the recklessness These countries managed to accelerate their of private financial institutions – specially American ones, industrialization inserting their productive capacities into but also European-, the world macro-economic imbalances the global supply chains issued from the IT revolution. and the permissive tax and monetary policies that favored Before this revolution, industrialization depended on scale the insatiable absorption capacity the United States had economies, vertical integration, clustering of the production

26 Raúl Diez Canseco Terry Peru: land of opportunities 27 of the vast foreign savings reserves. These circumstances view of both giants, but it is feared that, as it has happened caused a massive economic disaster. before, they will end up in nothing or with new rounds of tariffs and vetoes to Asian businesses. Just as many observing people had warned us, it was just a matter of time for the global macro-economic imbalances This uncertainty and lack of clarity has caused a loss of trust to cause trouble, and that was indeed the case. Although and the reaction of the markets. In a trade war, everybody the crisis originated in and extended from the financial loses. According to the calculations of the International markets of the United States, it soon became obvious that Monetary Fund (IMF), the loses caused by the trade war all the economies of a certain size were suffering from it would reach 700 billion dollars in 2020 only. and that they were not fully innocent, since they had allow the roots of the crisis to grow so deeply. For now, the impact of the trade war has been limited to the commercial changes themselves, which growth has The world is not and will not be the same after another practically been paralyzed, but there is a huge risk that the Black Monday: September 15, 2008. In the first place, the services and consumption will soon be affected worldwide Great Crisis did not only generate significant production if the situation extends. As if the trade front was not falls during the years of its acute phase; it also had a enough, there are other events that come into play, such negative impact on the world production trajectory, which as Brexit and the geopolitical tensions in the Middle East, turned out to be permanent. The persistent deceleration with the following increase in the oil price. of global growth is today a part of the new reality. We live through a period – and it will probably last for a long time In another front of the trade war, the IMF has criticized the – of reduced or disappointed expectations. attack of the United States against Huawei and the Chinese technology companies that may, according to them, put at Failure when increasing the multilateral liberalization risk their national security. The veto they approved against and the rising protectionism were already detrimental for the Asian company could force the governments and global growth, but an even worse landscape has arisen companies to choose between one “side” or the other; a because of the trade wars. This horizon was unthinkable “digital Berlin Wall” that would force countries to choose until now, but it seems to be materializing. between technological systems.

The fluctuations in the tariff war and the negotiations The future of globalization and global growth should between China and the United States, as well as a future not be the only worry. Just as worrisome, if no more, is front with the European Union, focus the international the adoption of nationalistic and populist stances at the organizations’ doubts on the future of global economy. The expense of multilateral diplomacy, when dealing with last meetings of 2019 managed to reconcile the points of great geopolitical issues, an approach that – it is not

28 Raúl Diez Canseco Terry Peru: land of opportunities 29 farfetched to assume – might lead to belligerent situations with devastating consequences for world economy.

In the range of risks, not everything is a trade war. In such a scenario, deposits have no profitability, bonds have negative rates and even companies have to pay to save their money. Investors risk more every time to get a good return of investment, and thus reach the performance they have fixed as a goal.

The alternatives for investors also include looking for opportunities in emerging countries, but the golden age in which they were the motor of their regions and dreamed of fighting the hegemonic economies for the power has been left behind. The exponents, grouped under the acronym BRICS (Brazil, Russia, India, China, South Africa) no longer cause such admiration and capacity to push as they used to. In China, growth is gradually decreasing in comparison to the quick pace it had for many years and, in South America, many economies are suffering, such as Argentina and Venezuela.

It is obvious that the forecast for most of the economies, event at the sight of the most relatively benign numbers of the production growth of 2017 -2018, is very different from the forecast from only one decade ago. Even though the list of factors that are suspected to contribute to the erosion of economic growth perspectives is extensive, we must pay special attention to the matter of the possibility for globalization – an important growth motor – to have already reached its maximum growth and could even be in danger of reversing.

30 Raúl Diez Canseco Terry II IS GLOBALIZATION THE MOTHER OF ALL WOES?

Raúl Diez Canseco Terry Peru: land of opportunities he collapse of the subprime mortgage market during the summer of 2007 in the United States, T which became a crisis when Lehman Brothers fell in the early morning of September 15th 2008 did not only mark the end of the so called “Great Moderation”, but it also meant the beginning of an age of instability and distrust.

The world crisis and its economic and political consequences have exacerbated a problem that has always come with globalization: it is blamed for things that have gone wrong in the world and its benefits have been downplayed. The anti-globalization reaction seems to be reaching historically high levels in many places.

This way, the beginning of the twenty-first century surprises us amidst the gestation of a new society. For emergent countries, from an economic point of view, all habits have fallen. However, others have not, such as the commercial walls that stop a quick insertion in the current times.

These are the barriers that give birth to anti-globalization movements and social convulsions expressed around the

Peru: land of opportunities 35 world forums during the last years of the past century. Due to its strong vindicatory tone, protests create a back to the past sensation or, in any case, they show that exclusion is the risk of globalization.

Economic historians relate that, in 1926, when a general strike hovered above England, John Maynard Keynes wrote the ending of Laissez Faire, one of the polemic booklets of the twentieth centuries. There, it explained how the free game of the market forces had not been able to establish harmony between both of its goals, efficiency and justice and, instead, it had given way to an age of economic The presidents and representatives of the 19 countries of the Rio Group celebrated their seventeenth Summit (2003) in the city of Cusco, where they uncertainty and growing political conflicts. Keynes made signed the document “Consensus of Cusco” in front of the giant rocks of the a case for a political agenda that would tackle the issues Inca fortress of Sacsayhuaman. Its goal is to encourage the strengthening of democracy and an economic development that is compatible with the reduction of misery and poverty, as well as the institutional means of poverty. to carry it out. This appreciation is still proclaimed around the world.

Many social happenings have created confusion in our society. For example, given the loss of autonomy in many states and governments due to world financial and political powers, decisions that are major for all citizens are made in caucuses, disregarding local influence and other old procedures. This was revealed at world conferences during the last decade of the past century: Rio de Janeiro in 1992 (environment), Vienna in 1993 (human rights), Cairo in 1994 (demography), Copenhagen in 1995 (poverty and social development), Pekin in 1995 (women) and Istanbul in 1977 (urban growth). World Summit of small and medium businesses’ leaders that took place in In those times, globalization was not on the world agenda. Guangzhou, China (2013). It was, however, in the Millennium Summit, organized by

36 Raúl Diez Canseco Terry Peru: land of opportunities 37 the United Nations in New York in the year 2000. It was communicate in a matter of second with any corner on the the first time that an event such as this one generated as planet, there are still millions of people who live in extreme much expectation or convoked as many heads of state: poverty, away from the benefits of science and wealth that a total of 180 who, in spite of having different ways of those technological advances create. thinking, opposite interests and different cultures, defined poverty, unemployment and the environment as the issues A four year old document by the World Bank regarding that caused the social conflicts with which humanity world development called “The differences between the entered the new millennium. rich and the poor are not only made of money”, showed a sign: “the arithmetic of the matter is brutally simple. If less In the end, the real expectations of millions of men and than 100 people control the same amount of wealth as women were let down by a declaration qualified as a “song of the 3.5 billion poorest people on the planet, the result can good intentions”: the summit informed that the globalizing be expressed with only one word: inequality. Our world is process sets the tone and defines today’s world issues, characterized by great poverty amidst abundance. We also and that we will live in a complex, controversial world. have to take into account that the gap is not only defined by those who have more and those who have less, but There are circumstances that should be reasons for deep also by the access that people have to water, education, concern. One of them is the fact that multilateral efforts health, and other basic services. for liberalizing commerce have failed miserably for many years, as shown by the example of the Doha Development Is globalization the origin of this situation that seems to Round, which no longer exists today in spite of the G20’s create chaos and anarchy, opulence and misery? For some, efforts for making it last after the crisis. Another one is the the answer is yes. Others have the opposite opinion: they increase of protectionism that had existed discretely for claim that globalization is a source of opportunities for several years, once again despite the solemn intentions of small countries and we must continue to bet on it. the G20. After becoming a part of the World Trade Organization Up until the first five years of the current century, economic (WTO), China stated that, even though joining the global globalization had been successful, especially for the village had both costs and benefits, the first surpass the United States and rich or industrialized nations that saw latter. The country with the largest population in the –some more than others- their economies grow steadily. world ended decades of isolation in the ‘80s under Deng However, on the flip side, poverty has not decreased Xiaoping’s leadership. India, with a population of 1339 in many other regions. It is paradoxical that, in an age million, started its reforms after China. Today, thanks to when humans know the genetic code of life and can it’s preference for science and open commerce, it stands

38 Raúl Diez Canseco Terry Peru: land of opportunities 39 out in the IT field. Its engineers and business people are in demand in the world market with state of the art software. According to a report by the international consulting company PwC, India will become the second largest economy in the world after China, surpassing the US, in only two decades.

A survey made by Gallup Argentina, published in La Nación journal in June 2001, showed the perception people had of emergent nations. Back then, half of the Argentinian population thought that globalization was “bad”, and 23% said it was “something good”. The poorest and least educated sectors were afraid of globalization because they perceived it as a source of unemployment and instability for businesses. Only 23% of the population thought that it offered new markets and better opportunities for their products. This perception was pretty much the same in all Latin American countries.

In many countries, the consequences of free trade, such as a more unfair distribution of profit, wage stagnation and the marginalization of a large part of society from the benefits of globalization, are situations that have caused people to protest.

Amity University was founded on March 24 2005 through the 2005 Uttar The year 2019 has been the year of protests. Whether Pradesh University. In September 2015, it signed an agreement with the it was in Chile, Hong Kong, Algeria, Lebanon or France, BSE, a subsidiary of the Bombay Stock Exchange, in order to begin a long- distance 2-year MBA program in the world financial markets, open to students citizens full of rage and with no leaders went out to the and working professionals. Amity University is classified as one of the best in pharmaceutics, management and engineering according to the Times Higher streets, resuming the fight of the Indignados movement Education World University Ranking. that took place at the beginning of the decade against a political system, the elites and inequality. Wearing make up like in the film Joker, a character that feels

40 Raúl Diez Canseco Terry marginalized, or wearing the mask from the movie V The French Yellow vests are often older people; the Chilean for Vendetta, thousands of people denounced similar movement includes many retired people, the protesters in problems in Bagdad, Beirut or La Paz, causing the fall of Barcelona or in Bolivia are people of all ages. The experts five heads of state or governments. From one corner of claim that these revolts are inspired on the movements the world to another, all kinds of rebellions are rumbling. that took place at the beginning of the decade: the Arab These protests have in common the fact that they arose Spring, which started in the end of 2010 in Tunisia, and horizontally and with no leaders, with no organization or Occupy Wall Street, in September 2011, against austerity structure at first. What triggered the mobilizations may and the abuse of financial capitalism. be relatively abstract, such as the extradition law in Hong Kong or, more pragmatic, such as the rise in the subway In democratic regimes, the belief in the capability of ticket in Santiago, Chile, or a new fee for Whatsapp calls democracy to change life is inevitably eroded. The people in Lebanon. then think that their salvation is in mobilizing, meaning in the overthrow of the people in power. They are revolutions Even though 2019 seems to be a very important year for dignity. In only a few weeks, these movements triggered when it comes to mobilizations, this is not unheard of or the exit of Abdelaziz Bouteflka, who stopped running for exceptional. Let us remember that, in the end of 2011, office for the fifth time in Algeria. It also triggered Omar Al Time Magazine choose “the protester” as person of the Bashir’s exit, overthrown in April after 30 years in power year. Outraged protesters expressed their rejection to in Sudan, or even the resignation of Bolivian president the economic dysfunctions revealed by the 2008 crisis Evo Morales, the Lebanese first minister Saad Hariri and that were transferred from the elites to the less powerful his Iraqi counterpart, Adel Abdel Mahdi. In Hong Kong, through austerity, unemployment and citizen insecurity. the extradition law that the protesters were criticizing was removed, and China announced it would “improve” Today, revolts have the internet and the amount of the chief of the executive power designation process, websurfers has more than doubled it 10 years, reaching 45 two of the demands of the mobilization for democracy. billion people. In Hong Kong or Barcelona, protesters share Repression, however, was atrocious in some places, such instructions through secure messaging systems, and even as Iran, where, according to Amnesty International, at least with applications that need a QR code to be downloaded. 208 people died in the mid-November protests in 2019. Even though the weight of the net is not dominant, it necessarily attracts those who are more connected – Politicians of every ideology hurried and pointed an meaning, young people -, but the percentage they have in accusing finger at external forces, in the first place, and, these mobilizations is not systematically verified. specially, at free trade as causes of adversity, instead of

42 Raúl Diez Canseco Terry Peru: land of opportunities 43 analyzing and assessing the internal policies mistakes of contemporary globalization and make sure it remains or omissions that lie in such evils. Governments prefer a powerful motor of prosperity, peace, and international blaming the different dimensions of globalization – security as a whole. commerce, finances and immigration – for phenomena such as the insufficient growth of the GDP, wage stagnation, Part of an explanation for these protests can be the simple inequality and unemployment before admitting failure fact that the growth of world GDP and the growth of when passing regulatory laws. Open markets, defended nominal wages remain under those of more advanced in times of abundance as the quick way to prosperity, are countries and, also, in emergent countries during the five now to blame for every evil when things get economically years prior to the 2008-2009 crisis. Other causes are the and politically difficult. increase in profit inequality and the phenomenon of the “squeezed” middle class in rich countries, as well as the The most extreme cases of this position are populistic worry caused by automation. It is expected for the latter to politicians. The populistic politician has a strong tendency affect the structure of their labor markets. to blame other for their problems and failures more than any other. Foreign companies that invest, export or migrate The twenty-first century has not brought hope for most to a country are their preferred target and the cause of nations, but globalization is the fastest way to access all national evils. This is why criticism to free trade, to technologic modernization and higher standards of living. investments and to immigration are an essential part of Capital, knowledge and technology are the reasons why the political ammunition of the populist. For example, in countries choose this process. Latin America there have been lasting populisms, as is Even though the economic dimension of globalization the case of Venezuela, but the damages it caused have acquires a spectacular manifestation, we have to been limited to the countries that had it. Unfortunately, understand and judge it through its political, social and the exception to this rule may be the United States today, cultural consequences. In these three fields, humanity shows because neo mercantilism may have terrible repercussions dramatic and irreversible changes. The universalization of on globalization, economic growth – including its own- democracy, the primacy of human rights, the defense of and international peace and security. the environment and transculturalization are aspects that American neo mercantilism has the potential to cause defined the face of the world. huge damages to the global economic interdependency On the other hand, from the moment the streams of built during almost three quarters of a century. But, even knowledge start flowing at the same time in all seven optimistically speaking, in the following years we well continents through the virtual speedways, we become have to tackle other issues if we want to avoid the decline

44 Raúl Diez Canseco Terry Peru: land of opportunities 45 participants of the same events, we become protagonists to products (agricultural and textile, basically) coming from of similar lifestyles, we adopt similar behavioral patterns poor nations. They also agreed to create a work division and we value our behaviors, even from the same ethical that will allow the WB to design policies towards the codes. improvement of the quality of life and poverty reduction, and the IMF to promote financial strengthening oriented Thus, global interdependence creates new agents, towards economic growth. comprehensive economic interactions, new political relations and complex juridical implications. In fact, during According to specialists, if industrialized countries the global process, many of the political issues traditionally would completely open their markets with no subsidies, considered of “exclusive jurisdiction” are now discussed developing countries could export billions of dollars a year. in multilateral forums. Some concepts, particularly the Reality shows that countries do not only use tariffs, but fundamentalist ones, are now relegated to the old trunk also quotas and antidumping penalties in order to avoid of memories, and the institutions that were supportive that third world country manufactured products enter their for many years are no longer adequate. It is necessary markets. to replace or adapt them to the new trends shaping the future. A prove of that is the creation of the International President of the World Bank James Wolfensohn (1995- Criminal Tribunal and the World Trade Organization, 2005), referred to the necessary change of approach of which developed from the General Agreement of Tariffs the IMF so that numbers “would not dominate” humanity. and Trade, and worked until 1994. “If we don’t achieve more equity and social justice, there will be no political stability and, with no political stability, The certainty that commerce is a driver for growth no financial contribution will grant us stability”, he said. – particularly in poor nations – and that it must be The mistakes that caused the crisis in South East Asia, considered in the international trade rules is now accepted in Russia and in Argentina, and in some other countries, by the international community, and it could not be in where the IMF was accused of making the situation worse any other way. Antidumping rules, the exemption from with its adjustment recommendations, have led to the industrial tariffs and e-commerce, among others, must be redefinition if its role. included in a global approach. Instant communication is the brain of the global revolution. Another adaptation process is taking place in the World The news of American President Abraham Lincoln’s Bank (WB) and the International Monetary Fund (IMF). assassination, which took place in 1865, took 13 days In their latest assemblies they urged rich countries to to reach Europe. The Hong Kong Stock Exchange crash, increase their assistance levels and to open their markets in 1997, which caused South East Asian finances to

46 Raúl Diez Canseco Terry Peru: land of opportunities 47 plummet, took no more than 13 seconds before causing panic in the world financial centers. At the beginning of this century, the world watched –live- the worst terrorist attack in modern history: on that terrible Tuesday September 11, 2001, two planes crashed into the Twin Towers in New York, and another one into the Pentagon, in Washington, resulting in thousands of deaths and the loss of millions of dollars.

Television, digital platforms and high-speed transmission reach every corner of the world, to global audiences. According to data of the audience of the official FIFA World Cup in 2018, 3,572 billion spectators – more than half the population over 4 years old – watched the soccer competition. Technology reduced the planet to the size of a village.

New communications have destroyed distances, and cell and satellite phones have made people accessible from any place. The microchip, invented in the US, accelerated the course of the communication revolution, and the software modified the behavior of people. With microcomputers, email, personal computers, computer games and internet, the world transformed, and it is no longer the world our grandparents had. These issues, as well as economic, political and social global movements, are constantly affecting human relations and, no doubt, they create a new way of social organization in which we cannot survive isolated, because the economies are intertwined and the multi-cultural approach will force us to work, trade, think and feel together. Ban Ki-moon is a South Korean diplomat who, from January 3rd 2007 until December 31st 2016 was the eight general secretary of the United Nations. His main legacy is the 2030 Agenda for Sustainable Development, in which fighting poverty is included.

48 Raúl Diez Canseco Terry Peru: land of opportunities 49 Also, the cultural aspect has a new presence in many it is affected by globalization but, among some negative world issues. Common languages and cultures are keys issues it may transmit, there are also some positive ones. that open great spaces of mobility and interdependence to Based on its integrating effects, the outcome will be positive. citizens. We feel that we are a part of a community with the same cultural roots that wants to strengthen its bonds, When all nations are economically integrated, local- dreams and ideals, in search of a post-modern identity national markets disappear and goods and services which will allow us to relate to others. appear at a global scale. This is how the element that characterizes globalization emerges: competition. This will For the first time in history, the world is multi-cultural. Most be a determining factor in scale economies. of us listen to and watch the same thing at the same time or we communicate at the speed of light with any corner of Encouraging more effort and promoting different the world, while hundreds of satellites – installed in outer approaches in scientific challenges, competition stimulates space – distribute the information and clear images that new discoveries, which did not happen in previous are received by over 5 billion unique cellphone users on Earth. commercial expansions. Globalization supposes the assumption of new challenges amidst fierce competition. Young people wear the same jean brand or listen to the Today, economies globalized under the “competitive trendy rock or rap music. They get exited about Burger advantage” principle widen the production process King, Pizza Hut, KFC products, or about Netflix, Fox or around the world. In this dynamic, companies use every HBO movies, for sneakers or polo shirts. Homogeneity possible strategy in order to stay one step ahead of somehow imposes itself; values renovate, permute or their competition, because consumers are constantly transfer from one place to another, embedding in other bombarded by international brands’ products and services cultures, breaking grounds and old family molds, changing through media. For example, everybody can now see the ways of life and tastes. The world cultural current will concept of not having a boss, working from home, from a not stop and it will continue to impose new rules, trends, café, from the car, in a collaborative economy. This is also behavioral changes, etc. called a gig economy.

There is, however, in the middle of this turmoil, a difference No company represents this change in work life better that consolidates itself: freedom. The century started with than Uber, which is part of a wave of platforms that offer the reaffirmation of this value as a source that generates new ways of purchasing, selling, renting and temporarily wealth –both moral and physical- and as a driving force hiring others: instead of salaried employees, independent of the organizational structures. The recurrent question is: workers are payed by consumers to perform a specific task. does freedom entail the loss of our identity? Indubitably, Ultimately, economies are market networks formed by

50 Raúl Diez Canseco Terry Peru: land of opportunities 51 producers, service providers, merchants and consumers. with creativity, a fundamental value of modernity and The base of the globalization process is that, on one hand, an essential value of technological capitalism. However, there are businesses where there are markets and, on the betting on globalization does not mean accepting the other hand, there is the capability to manage a company “law of the jungle” or anarchy, or renouncing the human using the opportunities and resources in order to obtain capability to govern the world we live in. It is exactly the more profit at a lower cost. opposite: world governance, the possibility to channel it and manage it so its impact will not deepen the gap between Unlike before, when goods where manufactured according the rich and the poor, between opulent and pauperized to the taste of business people, now they must adapt to nations. Therefore, it is about creating conditions to de consumers’ taste, and the right way to do that is by humanize globalization and put it at the majorities’ service. offering quality products and services at a competitive price. The price factor is decisive in the global market. Facing this challenge requires having an efficient line of work with differentiating elements so the products and services are acquired by global consumers.

According to Brazilian economist Eduardo Gianetti, globality can be explained from, at least, three elements: first, the fourth revolution, which includes search technologies, processing, diffusion and transmission of information, artificial intelligence, and genetic engineering. Second, the formation of integrated free trade areas (economic blocs). Third, the growing link and independence of financial markets on a world scale. Globalization is one of the essential budgets of the twenty-first century entrepreneurs’ strategic thinking. This does not mean that other local and regional phenomena and social realities must be ignored.

If globalization means competition, what makes it work? The reason is simple: the process is more than just changes and transformations. It goes intrinsically together

52 Raúl Diez Canseco Terry Peru: land of opportunities 53 III DIGITAL ECONOMY

Raúl Diez Canseco Terry Peru: land of opportunities wenty years ago, Thelmy sent an e-mail to a North American company based in New York, United T States, asking for a back support for his mother, who had a problem in her spine. Within seconds, the main office confirmed –also via e-mail – that they had the product, asked for his credit card number to charge the corresponding amount (50 dollars) in order to receive the product in Lima the following day.

Silvia, a 17-year-old girl, writes and laughs in front of a personal computer in a public pay computer place. She has become friends with a Spanish boy her age and they “chat” once a week: they talk about their favorite singers, their walks, the movies, their studies, etc.

The president, who has breakfast with very poor children one day in October, is pleasantly surprised because, in spite of their mothers’ extreme poverty, the kids have cellphones, and he uses them to tell the mothers not to worry, that their children are with him…and in the Governmental Palace.

Peru: land of opportunities 57 Juan Carlos, a high school student, has been using some it became the most important communicational instrument educational portals online as a bibliographical source for of all times. the past two years. This is why he frequently uses a public pay computer around the block so he can do his school Starting 2001, about 5 million emails were sent every homework at a low cost and at a high speed. minute; every hour, 35 million voice messages were delivered; every day, 40 million users connected to the Although it may seem obvious, after seeing these cases internet; and every 100 days, the traffic on the web would we have to ask: why should we thank the geniuses of duplicate. Starting 2003, there was even more movement. telephony and Bill Gates and Andy Grove, respectively from Microsoft and Intel? The answer would be: for showing us Today: 2020 the way to the future, a way with an unsuspected reach Up until 2018, 187 million e-mails and 38 million Whatsapp and, because, putting their contributions on other levels, messages were sent every minute, and 481000 Twitter both of them became hegemonic exploiting key points of IT messages were exchanged. architecture: the operative system and the microprocessor which, in a little over two decades, changed the history of Google and Apple are working on self-driving cars. Tesla economic development. has them already available and they work very well. We could say that self-driving vehicles are no longer a sci- The practical application of these components brought fi movie kind of thing and have become a reality thatis the IT and communications revolution, and this revolution available for everyone to have. changed many aspects of social dynamics, specially the economy. In this process, electronic trade and markets We have seen the evolution of drones for several years. have substantially modified the productive processes, Those flying objects have already come into play in several distribution channels and the way we do business. wars (for example, the case of the Iranian General Qasem Soleimani’s death in Teheran), and we can purchase them The internet is the star of this very new way of doing in any electronics store in all of its domestic versions. things (e-commerce, entertainment, educational help, However, Amazon wants to go one step further: they technological information, etc.). It is a net formed by want to do deliveries of the items that can be bought on thousands of little nets interconnected through computers, their website. telephone lines and other communication devices that help keep them united. We can see its impact thanks to two Cellphones are able to recognize us by simply scanning facts. The net was the star of the spectacular and sustained our eye. Fingerprints are moving into the background, and growth of American economy during the ‘90s, and in 2002

58 Raúl Diez Canseco Terry Peru: land of opportunities 59 soon we will be able to unblock our cellphones by just knowledge flows and new ideas become democratic and looking at the screen. grow. A world in which, through new technologies, jobs and businesses are reinvented, and constant, virtuous The power to disappear is a recurring element in science renovation processes are generated. Thus, people notice fiction. It might not yet be possible to turn a human being that not only can they perform better at their work, they invisible, but it is possible to wear invisible clothes thanks can also cooperate with their employers; they can innovate to a laser – the laser is in the clothes – that can reflect light in their jobs and not only receive orders. and create an invisibility effect for the naked eye. Definitely, after electrical and industrial revolutions, “the There are sunglasses that can show colors to people with web revolution” is another landmark, and it is nothing but color blindness, but let’s go even further: they are working the IT and communications technology setting the tone for on glasses – they go directly connected to the brain – that the modern person’s life. This revolution transformed the can make blind people see. We also have smart glasses world social map, in which now there are new movements. that can measure different blood levels, such as glucose, These, along with other factors, are giving rise to a when we wear them, which is very useful for diabetic network-organized society. people. The Industrial Revolution happened within 30 years; the Soon we will control every electronic device with our network revolution, in 5. This means it stopped being a thoughts through another device implanted in our head scientific reality to change our life habits and become that can interpret our brain waves and translate them so a door opening tool towards a world of surprises and the devices will do what we want them to. possibilities, as well as to a new business generation. At the same time, the “global technological shock” has Finally, The Internet of Things (IoT). Who would have generated what economists call “Digital Economy”, which guessed that we would end up having every device in our is the empire of the internet as the engine of countries’ home connected the internet? The fridge that does our growth. grocery shopping, the lights that turn themselves on, the curtains that lower themselves when we are not home, The inhabitants of developing nations can improve their the garage door that opens when we arrive. This is already quality of life by building technological infrastructure and happening. preparing their human resources to use the internet. The United Nations Development Program (UNDP) and other We live in a world that is interconnected through international organizations encourage underdeveloped complex networks, an electronic cobweb world where peoples to adapt programs that have been successful

60 Raúl Diez Canseco Terry Peru: land of opportunities 61 In 2018, the highest robot-per-worker level was registered in Germany, Korea and Singapore. However, in this country the employment rate is still high. Photo: Institute of Technical Education, Ang Mo Kio, Singapore. in other countries and that use IT to create jobs, attract and speed are the decisive factors for differentiating investments and cell high technology products in the successful people or businesses from those who fail. global market. In the age of IT or the web, information itself and its In his book The Information Age, Spanish sociologist creative process increases both. Creativity is specific to Manuel Castells says that this century is characterized by a humankind. So, unlike the industrial era, in which energy revolution focusing on the extraordinary IT advancements, and machines were the raw materials, in the digital area, which modify the material base of society and transform they are information and knowledge. the social landscape of human life ad a very quick pace. According to Castells, a professor at the University of Some distinguishing signs that complement this era are California at Berkley, United States, three interdependent video calls, video phone, the access to high speed internet, processes are creating a new society: 1) the crisis and file exchange, the cloud, private networks backups, taking restructuration of capitalism during the last 20 years; 2) multiple calls at the same time, internal networks, remote the IT revolution, with the birth of a network society; and access and point-to-point connection, just to mention a 3) the rise of new social and cultural movements. These few. changes have fundamentally altered the way we learn, work, and have fun. They have affected the way we live. A new paradigm The primacy of IT and communications creates the new so- This way, production, consumption, circulation and called Digital Economy, which pillars are knowledge, ideas their components (capital, work force, raw materials, and innovation. This is different from the old economy, management, markets and others) became organized which favored the concepts of capital, work and land. Of through a network characterized by the integration of the course, both natural resources and machines will continue media (oral, written and audiovisual), by the possibility of to be important, but the planning changes. interaction between users, and by the facilitation of access to all social groups, opening new participation ways This new paradigm also entails speed, quality, flexibility through social networks (Facebook, Whatsapp, Instagram, and networks. In this process, commerce, markets and YouTube and others) with no distinction what so ever. electronic relations generate a substantial change in the way we create and do things. It is the remarkable confluence This link network between economic agents and of structural changes, technological innovation, financial consumers leads to a global integration of financial capital, and business dynamism and more and more flexible commercialization and distribution. This integration also labor markets. Essentially, it is about the application of generates a fierce world competition, where knowledge knowledge and new ways to do and manage businesses

64 Raúl Diez Canseco Terry Peru: land of opportunities 65 on a wide range of global products and services. Nor and ask for a website for my company, and there! When accumulated experience nor capital are advantages any the client searches what is offered online in my line of more. business, as if it were the old yellow pages, mi product will pop up. This way we will be a part of the New Economy. With the value of the web and with knowledge as the This is a comparative advantage for the company, and guiding thread of the New Economy, universities and it will be so while others stay behind, because the client research institutes play a decisive role in the countries’ demands speed. The client also demands to be treated as economic development. a person and not as a consumption object to which we offer what we are selling, the way it used to be before. The new Digital Economy changes the paradigm that The times when mass production turned the client into moved economic activities and places the web as the a consumption object have been left behind; today, the engine of development today and for the next few client assesses their options and chooses through a click. decades. Up until a few years ago, only big companies or Just that; a click. transnational businesses could offer their products all over the globe. With the web, the middle man, frontiers and The internet is a very quick and massive information commercial barriers are over, giving growing opportunities exchange vehicle. It is the key technology of modernity. to everyone. However, we need to know how to use the It is, by nature, versatile, and it allows traditional info- doors that are opening to us, research our field of action technology to expand to previously discrete industries, and determine how to buy, how to proceed, how to sell such as telecommunications, electronics, consumption. and what is the businesses’ management style. In these Internet has had a larger impact on the world than steam, times, we must understand that competition is in a portal, electricity or the car had in their moments. The internet is in a network, meaning on the internet. Why? Because the growing at a vertiginous speed, invading every corner of client “forgets” – at least in industrialized countries – the human activity. It has revolutionized businesses, the media, traditional way to buy. Soon, purchases will be massive politics, religion, health, education and the way we make online. In 2018, 862283 dollars a minute were spent money. It has also destroyed institutions and created new online, which is a clear sign that the internet has definitely ones. It is the most powerful agent of change humankind changed the intermediation map. This demands efficiency, has had in a long time. particularly to small and medium companies. The internet is not just websites; e-mail and other tools One’s own IT infrastructure is not necessary to be online. such as chats are also a part of it. Both are new ways If I want to sell a good or service, it will suffice to reach out in which people can directly communicate. They do not to the people who offer internet services and connections

66 Raúl Diez Canseco Terry Peru: land of opportunities 67 replace the radio or the telephone, but they are simple, constantly growing. It has become part of the everyday effective instruments that can send messages massively life of millions of people. and in a matter of seconds. The internet makes financial and technical integration between clients and providers As connections increase, numerous websites that offer all grow. Most electronic firms have access to their contractors’ types of services appear. Among them, those who allow books regarding their products. Hewlett-Packard or, to look online for houses or apartments, electric artefacts, without going too far, national beverage companies can cars and trips or, simply, give any kind of information. know, through the web and in real tie, if their printers or Google has 3.8 million searches every minute (curiously, their bottlers are functioning correctly. If this were not the this number is lower than the number of videos watched case, they can solve it immediately. On the other hand, on YouTube: 4.5 million). contractors have a direct, up to date immediate access to However, it would be a mistake to believe that the internet the information regarding their clients’ sales. Some time is a generalized habit. Connection numbers show that ago, companies could separate innovation from production is a very effective cybernetic highway when it comes to only in a few areas, such as standardized communications, sending and receiving information, but its potential use will digital design and quality norms. take some time in emergent countries. Also, the decrease Speed and simultaneity, among other advantages, are in the fees will cause that more people use the internet. the most important characteristics of e-mail or electronic Its success in rich nations is based on is accessibility mail and chat communications, which also allow to regarding prices, quality, facility and utility. In Peru, the communicate live and without borders, thus becoming a fee for 1 GB of mobile internet is 2.48 dollars, the lowest more human instrument. in all of South America, second only to Chile, where the price per GB is 1.87 dollars. According to the international There is only one certainty for the future: innovation will portal cable.co.uk ranking, based on the analysis and be a constant in all of our activities. If a person has internet gathering of information about 6313 mobile data plans in influence, they do not only influence their circle, butthe 230 countries, Peru is number 51. In Finland, the cost is entire world. Our challenge as a country and as a society 1.16 dollars. Considering this, there will be more changes is to believe that we are capable of influencing. in the way we think about clients. Products are more or less similar, distribution reaches the entire world, prices The internet adds up to a world interweaving of websites are more or less regulated by the market. The only frontier and a very vast range of possibilities. It is the quintessential left for companies to differentiate themselves is the level universal vehicle of information exchange and it is of after-sales assistance and services they provide to

68 Raúl Diez Canseco Terry Peru: land of opportunities 69 costumers. Consumers know they have options, and they 25. However, consumption habits are far from being use them until they find a company or business they find productive: most of the time is spent on entertainment satisfying. portals (6.2 hours), with Spotify on the first place, followed by the use of services and social media (4.2 hours). The development of the internet is transforming commerce, finance and many other elements of society. It gives What we need today is to shake off the lethargy we live in. countries special advantages, like the high technology it is not possible to remain isolated from change and the field. It is not by chance that Seoul, Singapore, Tokyo, Hong New Economy; to neglect them would be missing the train Kong, Stockholm, San Francisco – Silicon Valley, Tallinn, of progress and competition. New York, Pekin and New Songdo are, in 2019, the most surprising cities due to their facilities and inventions, and Encouraging initial impulses is the State policies’ task. In their technology in general. This is why not being in the more technologically advanced countries, the impressive network of networks will be compared to the story of that development of online businesses had the universities, Napoleon’s general who lost a battle for 57 reasons: first, innovation companies and a massive risk capital formed he had no gunpowder. This was crucial; the other problems by both public and private sources as a driving force. could have been solved. In the next 35 years, Peru would need a 35 billion dollar The so-called New Economy has been changing the investment in communication infrastructure for attaining developed world, but Latin America is just beginning in an average OCDE connectivity, according to the Center this field. However, the growth potential in the region is for Latin American Telecommunication Studies. Due to its incommensurable. Consultants have no doubt that, due complex, particular geography, Peru needs public-private to Latin America’s demographic projection and increasing collaboration mechanisms in order to close the digital gap GDP, it will take the leap during this decade and it will and to give the more isolated areas with no connectivity position as an explosive growth market in the internet the infrastructure they need, so low income families would sector. be able to access these services.

In that projection, Peru has stayed behind. According to the last measurement performed by Comsocore, in 2019 there were 12.7 frequent internet users, whereas in Chile there were 13.3. Regarding the websurfers’ profiles, they are mostly male (56.2%) and young: 69.2% of frequent internet user are under 34 years old and 48.1% are under

70 Raúl Diez Canseco Terry Peru: land of opportunities 71 IV WORK IN THE VIRTUAL WORLD

Raúl Diez Canseco Terry Peru: land of opportunities he interconnected, flexible, diversified, open and accessible-to-all media system marks the T strengthening of virtual reality culture and creates changes in the foundations of life and the transformation of physical spaces.

The technological trend, or more precisely the virtual trend, creates opposition. The flexibility of processes allows for work instability and individualization to happen. Apparently, it has weakened the collective or societal element that used to be predominant in the industrial era.

Nevertheless, the strength of the technological change cannot be contained. Guru Nicolás Negroponte illustrates the difference between book and disc dominated commerce and bit dominated commerce:

“Sending recorded music in the shape of plastic pieces, and the slow human management of most information in the shape of books, journals and video cassettes has turned into the instant, low cost transfer of electronic data which move at the speed

Peru: land of opportunities 75 of light. This way, information becomes universally For certain analysts, from a value point of view, what accessible”. matters is not accumulating and having, but experiencing and accessing. Thus, contacting is the value of a new We used to buy CD’s with pre-selected songs; today, economic system that arises and that will make us thing music is rented or downloaded online; no CD or USB cable about a new contract in which trust is an important value required. Also, we access different global companies’ in the social fabric. Others think that the web is the new musical libraries, such as Spotify. The web eliminates nature of capitalism, which reinvents itself every certain the intermediary. Another example: books –for example, time. The same capitalism may last for decades and even Stephen King’s books- or business catalogues can reach for a century. According to this, people are still consuming any place electronically. No need for printing. They can be pretty much the same elements, but now they can do it a translated to any language. different way. Probably internet will not disappear. Unlike discs and A few characteristics of the current wave of technological books, bits can live forever because they pass from one support are remarkable. Digital technology allows electronic medium to another without losing quality. Also, companies to quickly increase or decrease their size by its cost could become insignificant, which is why we could deleting frontiers and challenging traditional production say that certain elements of the internet will have eternal life. patterns. New business models – companies based on digital platforms- are evolving from their condition of local When electricity became a basic economic force in the emergent levels and becoming world giant, often with 1920’s, similar things happen and it took some time for only a few physical, tangible employees. it to be accepted by societies. Just like back then, a few generations will have to pass for the network economy The rise of markets based on digital platforms allows and modern technology dominance to take place. for the effects of technology to reach a large number of However, due to its speed, transparency and simultaneity people as fast as ever. People and companies only need in changes and transactions, new technologies are setting a broadband connection in order to exchange goods and the conditions of commercial life, all of this while the services through digital platforms. This “massless scale” traditional market becomes obsolete because it is slow offers economic opportunities to millions of people who do and bureaucratic. In the New Economy, value is time and not live in industrialized countries, or even in industrialized saving in transportation inputs. Neither agriculture nor areas. electricity will disappear but, in modern dynamics, what creates work and businesses are the elements composing the net infrastructure and new technologies.

76 Raúl Diez Canseco Terry Peru: land of opportunities 77 The changes in the skills that are in demand also affect them to manage their operations in a more efficient way: these people. Automation gives more value to superior companies hire workers in a place where they produce cognitive skills both in advanced and emergent economies. parts, somewhere else to assemble those parts and, in a third place, to sell the final product. At the same time, Several facts have dominated the debate about work’s consumers have a wider range of products at a lower cost. changing nature. In the first place, technology is erasing companies borders, as shown by the rise of markets In the current economy, market opportunities for every based on digital platforms. Through the use of these participant are arising. Some companies create new technologies, business peoples create companies that markets to exchange goods or services. Even small differ from the traditional business process, in which input companies operate at a world level and grow more quickly. is put in one side and products come out of the other. They In the Alibaba platform in China, emergent business generate value creating a web effect that connects clients, predominate. Societies benefit as technology increases producers, producers and, at the same time, it facilitates options for service provision and for citizens to demand interactions in a multifaceted model. that their governments be held accountable for their actions. Compared to traditional companies, digital platforms allow to increase the scale more quickly and for a lower cost. The Companies, workers and governments are creating new Chinese conglomerate Ali Baba reached 1 million users comparative advantages as circumstances change. For in two years, and accumulated more of 9 million online example, the Indian government invested in technical merchants and yearly 700 billion dollar sales for 15 years. universities all over the country, and then it became a world leader of the high tech field, and Vietnamese All in all, technology has created more jobs than it has workers develop their language skill, creating additional eliminated. It has generated a higher level of job productivity human capital that allows them to expand to other in many sectors by reducing the need for workers when markets. However, in spite of the opportunities, there doing everyday tasks. However, that process has opened are disruptions; the decrease of the machine cost puts doors to new sectors that used to be left only for science the workers at risk, especially unskilled labor performing fiction. As technology advances, companies adopt new routine tasks. This occupation are the most susceptible to production methods, markets expand ad societies evolve. automation. Displaced workers probably have to compete with other unqualified peoples for low paying jobs. Even Companies apply new technologies for improving the use when new employments are created, the reconversion is of capital, for overcoming the information barriers, to hire expensive and, often, impossible. Secondly, technology externally and to innovate. The new technologies allow

78 Raúl Diez Canseco Terry Peru: land of opportunities 79 is redefining the skills that are necessary for work, particularly because of three factors. First, the demand for non-routine cognitive and social skills seems to be increasing both in advanced and in emergent economies. Second, the demand of routine skills for specific jobs is decreasing. Third, the advantages of the combination of different types of skills seem to be augmenting.

People with more advanced skills are using new technologies better to adapt to the changing nature of their job. Since 2001, the employment proportion in occupations that require a high level of cognitive skills has increased from 19% to 23% in emergent economies and from 33% to 23% in advanced economies. The changing nature of work requires a set of abilities that will increase with the workers’ adaptation capability and will allow them to go from one job to another.

Robots can complement workers who perform non- routine tasks that require advanced analytics, interpersonal or manual skills, or a high level of dexterity. For example, team work, relationship management, human resource management and care tasks. In these activities, people must interact with others based on tacit knowledge. It May, 2017. Macau’s University of Science and Technology is located on the has been proven that tasks related to design, works of venetian Macao, on Taipa Island. It is the first university to be founded after art production, doing research, managing teams, caring Macao was given to the People’s Republic of China. The Chinese Ministry of Science and Technology created two key centers on campus: the State Key for others and cleaning cannot be easily automated. In Laboratory of Quality Research and the State Key Laboratory of Lunar and Vientam, regardless of the industry, workers who perform Planetary Sciences. non-routine analytic tasks earn 23% more than those who don’t perform analytic, interactive or manual tasks; those who carry out more interpersonal skills earn 13% more.

80 Raúl Diez Canseco Terry In advanced economy, work has been rapidly growing order to survive. Technologies based on digital platforms in highly qualified cognitive occasions and in those that create a great amount of wealth, but they put it the hands do not require a lot of qualifications and great dexterity. of very small group of people. In the third place, the idea However, there has been a change in the jobs that require that all robots can replace workers generates frustration. In middle qualifications, such as operating heavy machinery. 2019, 1.4 new industrial robots were working. This means This is one of the factors that may generate an increment in that the world total must ascend to 2.6 billion. However, inequality in advanced economy. Wages for both medium the greatest level of robot to worker density is in Germany, qualification workers and low qualification workers South Korea and Singapore. No success. However, in these could be reduced. It the first case, it would be because countries, employment rates are high in spite of the high of automation, and, in the second one, the increase of robot prevalence. Because of this, certain specialists claim competition. that the degree in which technology is a threat to human work is exaggerated. Some of the countries in which the In the end, technology is transforming the way people industrial work proportion has dropped since1991 show work and make work decisions. Instead of the long-term a shift towards services. However, it is likely that the contracts that used to be the norm, digital technologies are automation will particularly affect younger workers. Even making way for more short-term contracts, often through though the adoption of robots did not have a considerable online job platforms. These sporadic work activities make net effect in employment in Germany, it reduced the hiring certain types of jobs more accessible and offer more of new young people. This way, the effects of automation flexibility. The widest access to digital infrastructure – can be different in country with and older population through portable computers, tablets and smartphones – compared to those with younger populations and foresee creates great conditions in which services can thrive on the incorporation of a great number of workers in the labor demand. The examples go from sending food to clients’ market. houses and car driving to more sophisticated actions, such as accounting, publishing and producing music. Recent data shows that, even though technology may be replacing workers in certain jobs, in general it increases Technology gives us the possibility to improve life the work force. Technological progress pushes the direct conditions, but its effects do not manifest in the same creation of work posts in the technology sector. People way all over the world. The creative work process benefits use phones more and more, as well as smart phones, all of society – and not just a few- specifically when the tablets, and other portable electronic devices to work, rules of the game are fair. In some sectors, workers benefit organize their finances, protect and heat up their homes, greatly with technological process, while in others they and have fun. Online interfaces encouraging this growth are replaced by technology and must retrain themselves in

82 Raúl Diez Canseco Terry Peru: land of opportunities 83 are the work of employees. Given that the interests of In the fifth place, technology, particularly social media, consumers change rapidly, there are more opportunities influences on the perception of a growing inequality in for peoples with a training related to the development of many countries. People have always aspired to a better mobile applications and designing a virtual reality. quality of life and to more participation in the economic growth they see around them. The larger exposure to Technology has also made job creations easier through different lifestyles and opportunities through social media online work or the incorporation to the sporadic job – lifestyles that are often divergent – only exacerbates this economy. Andela, an American company that trains sensation. software developers, created its business model about the digitalization of Africa. It has trained 20 thousand Conditions for sustainable, inclusive economic growth software programmers from different African countries by are good when aspirations and opportunities match but, using free online learning tools. Once they were qualified, when opportunities are unequal or when jobs and skills are the programmers worked directly for the company or imbalanced, frustration can encourage people to migrate collaborated with some of its clients in different countries. or it can fragment society. Andela’s goal is to have trained 100 thousand developers in 2024. The refugee crisis in Europe, the migrants forced out of the Syrian Arab Republic by the war and the Arab Spring are In the fourth place, many workers still perform low remarkable manifestations of this perception. However, productivity jobs in developing countries, particularly in according to the World Bank, data on income inequality in informal businesses that have access to that technology. developing countries does not corroborate such perception. The level of informality has remained high during the In most emerging economies, inequality has decreased or past 20 years, in spite of the improvements in business remained unchanged in the last decade. Still, the fact that regulations: in over 70% of Sub-Saharan Africa, 60% in income inequality is not increasing – despite the opposite Southern Asia, and over 50% in Latin America. In Peru, perception – is not a reason to celebrate, especially if we informality has maintained at around 75% for the past 30 consider that 2 billion people around the world work in years, in spite all of the attention this issue has received. the informal economy sector, where many of them have no social protection. It is therefore necessary to create a Wages and productivity are significantly lower in the social philosophy that will allow us to support the digital informal sector, where workers do not have a good wave and allows life sciences and information sciences to education, medical insurance or social security. The ever- converge on the design of a better world. changing nature of work makes the reevaluation of the work necessary within the frame of the formal worker – informal worker gap.

84 Raúl Diez Canseco Terry Peru: land of opportunities 85 V HUMAN TALENT

86 Raúl Diez Canseco Terry Peru: land of opportunities he fear of “machines taking over our jobs” has worried people for hundreds of years, at least since T the first industrial revolution, at the beginning of the eighteenth century. This revolution augmented productivity as well as the fear of unemployment.

There has never been a moment in which humanity has not been afraid of where its own talent for innovation may lead it. However, innovation has transformed life conditions. Life expectancy has improved, education and basic health services are basically granted, and the income of most people has increased. World population is healthier and better trained than ever. In 1980, in low- income countries, only 5 out of 10 children in primary school-age were enrolled. In 2015, this proportion had risen to 8 out of every 10 kids. In 1980, only 84 of every 100 children turned 5, compared to 94 out of 100 in 2018. In 1980, a child born in a developing country had a 52- year life expectancy. In 2018, that number was 65 years. However, there is still a very large unfinished agenda. Life expectancy in the developing world is still way behind rich

Peru: land of opportunities 89 countries, such as the Republic of Korea, where a girl born transforms. Learning in early childhood, tertiary education in 2018 has more than an 85-year life expectancy. and adult education that are sought outside of the work place are becoming more important for being able to offer In the eighteenth century, Scottish economist Adam the skills that future labor markets will require. In fact, a Smith wrote: “The acquisition of such talents, by the large part of the children who started primary school in maintenance of the acquirer during his education, study, 2018 will work in fields that do not yet exist. Even in low or apprenticeship, always costs a real expense, which is a and middle-income countries, many people work jobs that capital fixed and realized, as it were, in his person. Those did not exist thirty years ago. India has almost 4 million talents, as they make a part of his fortune, so do they app developers, Uganda, over 400000 internationally likewise that of the society to which he belongs”. This is certified organic farmers, and China, 100000 data labelers. still true in 2020. Meanwhile, many current jobs are changing, which results in new and sometimes unexpected skills. In 2020, it is Nelson Mandela once said: “Education is the great engine possible for a marketing professional to write algorithms, of personal development. It is through education that the and for a physics graduate to get a job as a quantitative daughter of a peasant can become a doctor, that the son operator in the finance sector. Workers that bring new of a mineworker can become the head of the mine, that a skills to the corresponding technical specialties (such as child of farm workers can become the president of a great teachers who are good at web design and ideal agents in nation. It is what we make out of what we have, not what macro data analysis) will probably be in high demand. we are given, that separates one person from another”. What are the least required skills? Studies show a Automation is reconfiguring work and the skills it requires. polarization of the work field, meaning the expansion It increases de demand for advanced cognitive and socio- of high and low-training jobs, which comes with the behavioral skills, but the demand for specific skills in a decline of jobs that require a medium level of qualification. particular job is decreasing. Meanwhile, skills related The demand for workers who can perform non-routine to “adaptability” are more and more in demand. This cognitive skills is growing, such as research that requires combination of specific cognitive skills (critical thinking a high qualification. The same thing is happening with the and problem solving capacity) and socio-behavioral skills relative demand for people that perform non-routine tasks (creativity and curiosity) can be transferred from one job that are easily automated, such as meal preparation. By to another. contrast, the demand for workers who perform routine The efficacy of nations to face the demand for new work tasks, such as the ones carried out at medium qualification skills depends on the speed in which the aptitude offer jobs (for example, data input), is declining because of automation.

90 Raúl Diez Canseco Terry Peru: land of opportunities 91 Learning during early childhood, tertiary education and adult education that are sought outside the work place are becoming more more important for being able to offer the skills that future labor markets will require. The creation of a work force that is trained for the future frame of demographic changes, whether it may be because of work depends on the growing demand for advanced of an aging population, as is the case in the European cognitive skills, socio-behavioral skills and adaptability, Union, or the large amount of a young population in Latin but the technological change hinders the task to anticipate America. what specific job skills will remain current and which ones will become obsolete in the near future. In the past, The best way to make people acquire the skills required by changes in skill demand driven by technologic progress the changing nature of work is starting in early childhood. took centuries to manifest. In the digital era, technologic In France, the age in which kids start school will be lowered advances seem to demand new skills overnight. The from 6 to 3 years old. According to President Emmanuel capacity to adapt quickly to changes has more and more Macron, this reform seeks to encourage equality through the value in the labor market. Adaptability is the characteristic improvement of the capacity of unprivileged background so people are looking for, meaning the capability to respond they can be competitive in the educational system. to unexpected circumstances and to unlearn and quickly Early investments in nutrition, health, social protection and learn again. This requires a combination of certain cognitive education set the foundations for the future acquisition of skills (critical thinking, problem solving capacity) and socio- cognitive and socio-behavioral skills. Also, they contribute behavioral skills (curiosity, creativity). Several studies about to a better resilience in the face of uncertainty. Investing in technical and professional training students have shown early childhood help increase the equality of opportunities. that having a high self-efficacy allows to significantly Currently, those investments are insufficient, particularly predict their adaptability in their career. Having a solid among poor and unprivileged children, who would benefit foundation of skills is important in order to later develop the most from them. advanced socio-behavioral and cognitive skills, as well as other that are the base for adaptability. For most children, The architecture of the brain is formed from the prenatal this foundation is built during primary and secondary stage to age five, so this period is fundamental for the education. However, according to a 2018 report by the development of cognitive and socio-behavioral skills. World Bank, in many low and medium income countries, During these years, the brain’s capacity to learn from school does not give the basic skills we could expect. More experience is at its highest level. Experiences and learning and more frequently, there are important adjustments acquired during this period have a direct influence on the made outside of mandatory education and formal jobs. achievements that will take place in adulthood. If we miss this opportunity, it will be more difficult to develop skills; Developing the right skills for facing the ever-changing investments in nutrition, health and stimulation that take nature of work supposes a permanent learning that is place during the first 1000 days of life will allow forming particularly related to the readjustment of skills within a

94 Raúl Diez Canseco Terry Peru: land of opportunities 95 strong brains. The participation of parents and caregivers was given to the Cuna Más National Program in order to during this phase is also important for the child to develop take care of 60688 children who need to see their basic linguistic, motor and self-regulating skills, as well as their health, nutrition, security, play and skill development social behavior. needs met.

From age three, socialization and a more formal early On the other hand, economies that are formed and driven learning become important, and they will prepare the by technology have started valuing higher education more child for successfully going through primary school. (higher education being any kind of education that comes A quality preschool education strengthens executive after high school, including institutes and universities). functions (such as functional memory, flexible thought The average profitability of higher education around the and self-control) and leads the child through a path of world is 16%, but not all have such a high performance, as better learning. However, in order to obtain those results, shown by Peruvian National Superintendency of University preschools must reach certain quality thresholds. In Higher Education (SUNEDU). Out of 141 universities and some cases, receiving a low quality preschool education 4 graduate schools that applied for national certification in is even worse for a child’s development than not getting 2015, only 85 universities and 2 graduate schools received an education at all. Poorly developed early childhood their licenses to offer their services, after the compliance programs are linked to unsatisfactory results in language for basic functioning conditions was inspected. development cognitive skills and sociability. In Peru, in spite of the Wawa Wasi program, which offers safe community The changing nature of work makes higher education nurseries and a healthy diet for children aged from four higher for three reasons. In the first place, technology and to six in impoverished zones, language and motor skills integration have increased the demand for higher general development has not improved due to the lack of properly cognitive skills (such as the capacity for solving complex trained caregivers. problems, critical thinking and advanced communication), which are transferred from one job to the next, but that Of all the investments a persons receives along their cannot be acquired only through schooling. The growing life, the ones made in early childhood generate the most demand for these skills has increased the wages of their benefits, and their advantages increase over time. graduates and, at the same time, has decreased the demand for workers with a lower educational level. In the Even though investments are an efficient tool for the second place, it generates more demand for permanent development of valuable skills, early childhood investments learning. It is expected for workers to not only change jobs do not reach the necessary level. In 2019, nearly 10% of during their lifetimes, but also to switch careers. Higher the Ministry of Development and Social Inclusion of Peru education – with its wide variety of courses and flexible

96 Raúl Diez Canseco Terry Peru: land of opportunities 97 98 Raúl Diez Canseco Terry Peru: land of opportunities 99 programs, such as online learning and open universities tension on the university system. There are three factors – meets this growing demand. Third, education – for which it is important to make the road between general particularly in universities – becomes more attractive and professional education flexible, due to the changing option in the changing world of labor because it is used nature of work. First, the value of the combination of as a platform for innovation. The pertinence of the higher general and technical skills is growing. Second, even education system will depend on how they perform on technical jobs seem to need more higher order general these three fronts. Skill acquisition becomes a never- skills and their use, which means that people should be ending journey, no longer delimited and unchangeable. able to acquire them before starting their work life and Flexibility increases if a student is guaranteed not to have as they work. Third, people with restricted professional their options irrevocably limited once they choose a path. skills would benefit from the opportunities to acquire For example, when they start higher education, most new skills. In 2019 in Peru, over 250 000 students were students must choose between technical education and educated in 1800 Technical-Productive Education Centers university. University education gives them the higher (CETPRO) which, according to the project by the Ministry order transferrable skills that determine their general of Education, would move forward to higher education preparation for learning or receiving training. On the other institutes and schools, promoting the consolidation hand, technical education is directly related to specific processes of different educational levels. trades. Once a decision is made (especially if we opt for a technical training), it will be difficult and expensive to Higher education systems are not indifferent to the reverse it. changes in the demand: the path of university education and technical training are often intertwined. A wide range The relative profitability of university and technical of university programs includes a technical dimension education is changing in an unpredictable way, and most or orientation, for example, in science, engineering and economies are still in need of both. Technologic progress technology. tends to decrease the demand for specific training in certain fields, so some technical training diplomas are The platforms technology gives us make higher education becoming obsolete. It also leads to a higher depreciation more accessible. The most important long distance, open, of the skills that are restricted to specific jobs compared to massive education online programs take place in India and university skills. China. In Brazil, in 2013, Veduca stated the first online Masters in Business Administration program, and in 2018 Technical higher training meets the immediate demand it offered over 5000 courses. Courses are a promising for technical skills, allows a faster transition between way to offer flexible and personalized education to a large education and job for some people, and it alleviates the part of the population, but guaranteeing their good quality

100 Raúl Diez Canseco Terry Peru: land of opportunities 101 is an important challenge. According to a recent study, (Silicon Valley), Harvard and the MIT. In the United students that took an online course performed worse than Kingdom, Cambridge University, Oxford University and those who took on-site lessons. Higher education systems the University College London (the “golden triangle”). should guarantee the acquisition of a minimal number of In medium income countries, such as Peru, this type of transferrable cognitive skills, which are the best measure educational centers has begun to appear as well: San we could take to prevent work uncertainty, but not all Ignacio de Loyola University (USIL) has a Technological systems make it. Innovation Laboratory and entrepreneurship labs.

Peruvian universities vary in their capacity to transmit As the nature of work changes, certain workers are fundamental higher order skills, such as critical thinking, affected by the constant modifications in the skills they problem solving capacity and communication. In 2012, need. As economies change to give us the human capital one more year was added in Honk Kong to university of the next generation, current employable age population education undergraduate programs, so they can focus their begins to worry about their work perspectives. A first step attention on problem solving capacity, critical thinking, to mitigate this worry is to promote adult learning as to communication, leadership and permanent learning skills. transmit new skills or to improve the skills they already For most students, this change seems to truly encourage have. Adult learning is an important channel to readjust the acquisitions of the skills sought in an undergrad student. skills so they match the future of work, but their design requires serious reconsideration. Adult learning programs Higher education also develops transferrable socio- adopt numerous shapes: adult literacy programs, skill behavioral skills, such as team work, self-confidence, development for jobs and business programs. negotiation, resiliency and personal expression. In a survey that took place in an Indian company that hires According to the World Bank, over 2.1 billion adults of engineers, socio-behavioral skills’ importance scored as employable age (between 15 and 64 years old) have high as technical qualifications and credentials, or even low reading skills. In Sub-Saharan Africa, almost 61% of more when it came to entering the work force for the first workers cannot read properly. In Latin America and the time after graduating. Employers think that the lack of Caribbean, it is 44%. This is a problem. In order to face the socio-behavioral skills is at least as problematic as the lack future of labor, functional literacy is a necessary skill for of technical skills. survival. The economic and social cost of adult illiteracy in developing countries is estimated in over 5 billion dollars In the developed world, there are well known examples per year. of successful innovative universities: in the United States, Stanford University, the University of California, Berkeley

102 Raúl Diez Canseco Terry Peru: land of opportunities 103 May, 2017. As part of their academic tour in Asia, the delegation of authorities from San Ignacio de Loyola University had the honor of meeting the minister of Education in Singapore, mister Ong Ye Kung. Singapore has the second best education in the world, after China, according to the last results of the Program for International Student Assessment 2019 (PISA). However, many adult learning programs do not have a programs with short modules given through mobile apps significant impact. Business programs tend to improve are particularly promising. For example, in Africa, students business knowledge, but they do not generate employment. who received their training through their cellphones as In Peru, training courses for female entrepreneurs allowed part of an adult learning program got much higher grades to improve existing businesses, but they did not cause a on reading and on math than those who did not receive significant increase in employment, frequently, professional that kind of training. Also, training programs offered training for unoccupied people causes an increase of short through cellphones protect the students from possible term profit, although the number of job posts does not stigmatization. Besides, adults deal with high levels of always increase in the long term. Even in successful adult stress due to family matters, as well as their kids and their learning programs, costs are high and they take a long jobs. They also face high opportunity costs regarding the time to create positive up-to-date net values, even if they income that they lose and the time they stop dedicating maintain their benefits. For example, it took seven years to their children, but these programs often have inflexible, for the Pro Joven initiative in Peru and 12 years for the long schedules. Proyecto Joven in Argentina. The improvement margin for the design of adult learning Adult learning is often only one expensive component of programs using neuroscience and behavioral economics a bigger package, which is why it is difficult to determine concepts is huge. Both practical exercises and visual aids its efficacy regarding cots. The two main reasons for low are useful for this type of learning because they facilitate efficacy are a deficient design and an incorrect diagnosis. memorization. Also, it has been observed that including Adult brains learn differently, and this is not always taken motivational tools, such as financial rewards, work into account when designing the programs. Due to the experience or constant commentaries, improves learning brain’s capacity to learn decreases with age, learning in adults. An experiment with young adults showed that, initiatives during adulthood face an intrinsic difficulty: if they are offered rewards, their performance improves making the participants acquire knowledge when the when the training is over. brain learns less efficiently. Advances in neurosciences suggest different ways to approach this. The capacity of Adult programs have better results when they are explicitly the adult brain to learn depends significantly on how much linked to employment opportunities. One well known way it is used. of doing this is establishing said connection through training programs or internships that associate the training with Learning programs for this age group are more likely to everyday experience and motivate the participants with be successful if classes are integrated into everyday life. the promise of a future economic profitability. The Jóvenes Given adult people’s time is subject to different demands, en Acción program from Colombia combines classroom

106 Raúl Diez Canseco Terry Peru: land of opportunities 107 instruction and practical training in private companies. The possibility to get a job and formal income increased in the short term and sustained in the long term.

When we analyze the magnitude of the challenge that preparing for the future of work means, it is important to understand that many children that are currently in school will work jobs that don’t even exist today when they graduate school. As the scientist Marie Curie once said: “You cannot hope to build a better world without improving the individuals”. The benefits of human capital transcend private benefits and extend to other people, and from one generation to another. For example, deworming a child decreases the chances that another child will have worms, which allows these kids to improve their learning and obtain higher salaries in the future. These individual benefits of human capital add up until they become great benefits for economies: the more human capital, the richer the country.

Human capital complements physical capital in the production process and is an important input for technological innovation and long-term growth. An aspect we must not ignore is that, when generating higher income, human capital accelerates the demographic transition and reduces poverty. In the long-term, human capital is important for societies and encourages social capital, gaining the people’s trust and tolerance towards their peers from different cultures.

108 Raúl Diez Canseco Terry VI PERU OF THE BICENTENARY n the face of this challenging world scenario that affects every aspect of our lives, we need to have a shared I vision of the country. In principle, it is vital for young people to be a part of the solution instead of the problem. Secondly, the State must offer new answers for the institutions to work and guarantee favorable ecosystems for the development of entrepreneurship, entrepreneurs and Peruvian entrepreneur society.

These factors are important, as is a global vision of the world. Over the years, we have said it many times: the ideal entrepreneur society will never be separated from universal values such as democracy, freedom, justice and ethics. These universal values are the foundation of human coexistence, and they are becoming more accepted by different cultures. In his book Clash of Civilizations and the Remaking of World Order (1996), the political scientist Samuel P. Huntington, a professor of Political Sciences in Harvard University and founder of Foreign Policy magazine announced a certain global collapse caused by different visions of the role humanity plays.

Peru: land of opportunities 113 This is due to the vision of some religious movements It wasn’t until July 2002 that the democratic forces signed and heterogeneous, fundamentalist cultures. Even more the National Agreement, which is still valid today. By virtue so, because of what happened in Arab countries in of said engagement, we moved forward on many aspects 2010 and 2011, the years of the so-called “Democratic with the goal to build a fair, plural, inclusive society, as well Spring”, as well as the refugee crisis in Europe caused by as to explore and exploit our resources according to the Islamic terrorism, we can see the acceptance of cultural needs of Peru and the markets. diversity and assessment of ethics and morals, thus giving common attributes to every civilization. This reflection Today we also know that corruption affects the proper shows that every human activity must consider the functioning of democratic systems as well. In the current system that encourages creativity and combines liberal context, corruption is a distorting interference of the private and humanist values with the basic components that drive sector in the functioning of the public sector. The lesson modernity, those that generate wealth: entrepreneurs this is teaching is that every agent and potential leader and business people. must abandon any temptation to break the law, violate institutions, or impose their individual or group interests. This thoughts matter because, in the modern business Their efforts must be oriented towards the encouragement dynamic of the twenty first century, any business that calls of initiatives seeking the common good and prove that the itself competitive, no matter its size, aims to differentiate development of an entrepreneur solidary society is the itself from others, weaving and transmitting an identity only way to guarantee sustainable growth and social and that matches the corporate social engagement. The latter political sustainability. After all, the road to development does not have to be isolated from the environment in and progress will always be long and winding. This is why which it develops and the roots it came from. our progress as a nation is not what he hoped to have as we get closer to the bicentenary, despite all our potential. This In the face of what happened in Peru in the end of the is reflected by a list of lost opportunities and uncertainty twentieth century which, unfortunately, transcended periods, jailed presidents or presidents who participated negatively in the social and political fields (striking in illicit activities, business people tried and a bunch corruption in institutions, impunity in different levels of the of unfortunate decisions that destroyed clear and safe government, among others), many people thought that perspectives for young entrepreneurs. Luckily, Peruvian the country would fall into a crisis, chaos, pessimism and wisdom and creativity, as well as the unwavering capacity citizen demoralization. However, the popular reaction was to peacefully overcome adversity, mitigated whatever appropriate, and we were able to overcome the challenges glimmer of social turbulence in any age. Building a great imposed by authoritarianism and return to democracy. country, as the forefathers of independence dreamed, is still the compass that guides us towards progress.

114 Raúl Diez Canseco Terry Peru: land of opportunities 115 Starting only in the beginning if the twenty-first century grows nonstop under a State that promotes productivity, we are all aiming towards that supreme target: some, with equity, solidarity and citizen participation. To sum up, a intelligence and knowledge. Others, with drive and hard strong State that ensures balance and social inclusion, work. “Not gold but only men can make a people great and harmonic economic growth and equality of opportunities, strong; men who, for truth and honor’s sake, stand fast global competitiveness and national identity as an and suffer long. Brave men who work while others sleep, exportable brand. A State that will never be based on who dare while others fly. They build a nation’s pillars force or the will of only one person, but one that represents deep, and lift them to the sky”. This quote belongs to the the true feelings of the whole nation. A humanist State, North American writer, philosopher and poet Ralph Waldo engaged with its community, and one that permanently Emerson, and it highlights the transcendence of human seeks the common good. The economic development will. If we want the decade of the bicentennial to find Peru of the country must be the result of the effort of every celebrating its independence with a solid democracy, with economic agent, particularly companies, entrepreneurs the lowest unemployment and poverty, with profitable and business people, who are responsible for the creation institutions, with a high investment in education and of wealth. Initiative, creativity and perseverance must knowledge, with a competitive, global human capital, with drive social transformations. Economic growth based on an entrepreneur society and an internationalized economy, the exaltation of profit has no place here because the we must make now the transformations that the country interest in money does not understand equity and ends up needs. facilitating the accumulation of wealth in only a few pairs of hands. Jorge Basadre, the illustrious Peruvian man who felt the frustration when independence, in 1821, did not fulfill its We have stated that the basic sources of wealth are promise of prosperity, said: knowledge and work, and that the profit these forces generate must be equally distributed. Thus, competition in “The promise of Peruvian life concerns the youths, the market will not only be for products and brands, but so they will revive it; men of study in their different for knowledge and technical qualification. I have promoted fields, so they turn it into a plan; the public opinion in its conscious sector, so it becomes a purpose”. these ideals along my public and private careers. I have practiced them for over 50 years and I reaffirm myself This is today’s engagement: to build a society that is in them once again. We understand that the economic different from the one we have, but still aligned with aspect is a basic component of the social one, and that its ancestral roots of a solidary spirit and team work. both constitute the pillars of what is human. This is why “Tradition, modernity and future” could be the trilogy of this we must invest in the education of the unprivileged, as entrepreneur society we aspire to build together, and that well as in science and technology, so our country is more

116 Raúl Diez Canseco Terry Peru: land of opportunities 117 competitive. Below, the goals we must work for nonstop in and economic needs, but also the challenge of creating order to fully become a country of entrepreneurs. the conditions for existing businesses to prosper and for new ones to establish. This way, we must not hesitate in  To strengthen and maintain the market social promoting business values such as efficacy, innovation, system, where the democratic, institutional competition and high performance. This way, we will Government sustains the empire of the law in encourage a positive mindset and an entrepreneur spirit in order to guarantee the country’s political and social all levels of society. stability. The entrepreneur society we aspire to needs well-formed  Make a deep and lasting State reform that will human resources that are willing to assume new roles in facilitate private initiatives and has an influence over changing scenarios. This, of course, within the context of an efficient decentralized executive government a system that rewards initiative and creativity. This society action. celebrates the success of entrepreneurs and has members that share the same convictions and attitudes. This is the  To sustain constant economic growth through the society that shapes the country we describe. conditioning of the territory, the rational use of natural resources, capitation and mobilization of Global country capital, and advanced technology. The economies are rapidly growing at the pace of  Reaching progress and wellbeing for marginalized innovation: from the exploration and exploitation of raw families and communities through social investments materials to industrial production, to the economy of growth, and programs that improve social sectors which is based on service and information, and now virtual particularly in the fields of education and health. or digital economy, based on technology. We Peruvians must value this change because it gives us the opportunity  Promote the value of peace and eradicate criminal to reach more advanced countries in certain fields. activities in all their forms. Safety is vital for generating the trust of economic agents. There is no doubt that with the internet we have the possibility to find jobs anywhere we want, acquire new Given that politics must offer an answer to real people’s skills, study now programs and establish and expand our worries, we need politicians that are in tune with them own businesses. In the global dynamic, where information and have no ideological prejudice and who find solutions flows nonstop, we Peruvians are better informed, and through feasible, well-designed measures. Government the requirements to reach economic success are more policies must not only answer to a balance between social accessible. This is because the information and the potential

118 Raúl Diez Canseco Terry Peru: land of opportunities 119 of digital and satellite technologies is transcendent and it permanently modifies trends and trades, the way we learn and the way we communicate.

Democratic country Not only in Peru, but in this whole world, politics are looked at with disenchantment, particularly by the young. This phenomenon has a healthy side: people are no longer as dependent on politicians to solve their problems. They have learned to take responsibility for their own lives. We also know that, in a more complex, interdependent world, a politician is less relevant than before. “Finally”, some would say: we are finally no longer subject to the utopias of dogmatic, delusional elites. Actually, just as flesh and blood leaders have changed, globality has meant the reaffirmation of tendencies that aim towards the action of people, of the governments and the States. These are:

 Democracy as a politic system.

 Social market economy as a economic system.

 The defense of human rights.

 The promotion of world peace as the foundation of civilized coexistence.

 The protection of the environment. With the support of Luis Alberto Moreno, president of the Inter-American Development Bank (IDB) and with the creation of the Guarantee Fund it offers, it was possible to finance multiple projects from Peruvian young people.  Meritocracy for good governance.

In 1900 there were barely 19 democratic countries. Currently, more than two thirds of the world’s population

120 Raúl Diez Canseco Terry lives under this system, according to The Economist’s or social. The latter includes legal and regulatory Intelligence Unit (2019). Democratization has advanced frameworks, institutions, ethical values, attitudes and nonstop. Today, political balance includes the wide diffusion behavioral guidelines society shares. This social capital of this form of government, based on civil freedom and the is not created by the Government or the market, but by election of their leaders. a strong civil society on which sustainability and stability are based. Therefore, we should not be surprised that the The essence of the democratic system is alternation, most stable countries are the ones that have changed the which allow for people of different creeds and races get most in their form, but not in their norms. The United State to be representatives. Democracy is shaped as a system has had the same constitution for over two centuries. This of dialogues. Dialogue is the base of consensuses, which and monetary stability are the pillars which permanency allow the participation of every political agent. Democracy has ensured its progress until today. is the only system humanity knows as an unbeatable source of trusting relationships and alternation in power. In Peru, it is the opposite. Whenever we have tried to change, the first thing we did was to replace the norms Among the values of democracy, we quote responsibility, that, somehow, gave us stability. With the exception of a honesty, the respect for others’ freedom, and tolerance. few presidents, most of the people in power thought that Its main social tools are the empire of the law, the free history began with them. Warlordism? Lack of vision? market and transparency. As long as we do not reduce Messianism? it to mere elections, and it is protected by a Constitution that limits power, democracy is the only known system However, the democratic experience of the first decade that can create constant change. The validity of a real of the twenty-first century has been pleasant: there have democracy will create a Peru in which, whether it be by been changes in the governing style, but not in the model inertia or by the influx of freedom, creativity will prevail that created growth and wellbeing. However, during the over conformity, and honesty over hypocrisy. A well-led past few months, this issue has been discussed through democracy will guarantee trust and stability, which are a constitutional reform project that aims to “modify the fundamental if we want to achieve a harmonic growth and constitutional chapter linked to the economic regime”. This a sustained development. If we maintain these ideas, the initiative is a mistake, for we would go back to the infamous three essential elements of progress will be guaranteed: Peruvian pendulum, constantly changing our economic entrepreneurship, sustainability and trust. model. As a consequence, we would regress 30 years.

A report by the World Bank called “Institutions Count” We cannot throw everything away. This is essential for claims that capital may be physical, financial, technological giving continuity to the current economic model, which

122 Raúl Diez Canseco Terry Peru: land of opportunities 123 has led us to a scenario of growth and economic stability, Mohammad Yunus, 2006 Nobel Peace Price, writes one supported by institutions such as the Central Reserve answer for those questions in his book Creating a World Bank of Peru (CRBP), and reaffirmed world-wide by Without Poverty, published in the ‘90s. The importance of the IMF and the World Economic Forum (2018) due to this Bengali business man and professor’s work consists the country’s food performance in the management of in de demonstration that there are always new systems monetary policies. to fight extreme poverty and that, due to their conception, focus and operability, these systems are directed towards To sum up, democracy is the most efficient system to reach people or social groups that need solidary help. They are development, and its value should not be solely judged by non-conventional, unorthodox ways of support, far from its contributions to economic growth, but because it is an the assistentialism or populism that characterize our economic end to increase the people’s wellbeing. Also, countries. They are formulas that defeat bureaucracy, freedom, which is its essence, encourages creativity and appealing to the creativity and the engagement of the the free flow of information we need to grow. Combining most impoverished people, and they activate their only theory with some of the experiences that took place in assets: the desire and the will to work their way out of Peru and the rest of Latin America, fortunately, in a report extreme poverty. by the INEI (National Institute of Statistics and Informatics) we see that 50.2% people know about democracy and Grameen Bank has a relevant particularity: 95% of its value it because of respect for peoples’ rights, the freedom beneficiaries are poor women. This is because, according to express ideas and periodic clean and transparent to Yunus, the money that women bring to the household is elections. The population is certain that “democracy is much more beneficial for the families than the money men preferable to any other form of government”. bring. After an experimental phase that started in 1976 in Bangladesh, the bank started working in 1983, fighting Solidary country usury and giving micro loans to the poorest women from Do all Peruvians have the same opportunities? Do they all villages under a simple philosophical concept: trust as a equally get access to funding? Can a person stop being supreme value (the bank does not ask for a guarantee poor on their own? These questions and many more have or a collateral). They give micro loans to groups of 5 been asked for hundreds of years. It seems reasonable that women (team work and mutual responsibility) and the not all citizens have the same access to funding, given that reimbursements have interests that cover minimum costs. not everyone has a warranty and that they are essential Grameen Bank, which gives 50, 100 or 500 USD loans, for credit. helped over 100 million families all over the planet until

124 Raúl Diez Canseco Terry Peru: land of opportunities 125 The 2030 Agenda is the most ambitious global plan to eliminate poverty, the In order to make this a reality, all Member States approved 17 Sustainable fight against climate change and the reduction of inequality ever adopted by the Development Objectives (SDO) and 169 goals associated to those objectives. international community. It was developed based on national questions asked They give an account of the scope and the ambition of this universal plan. The to the most vulnerable populations in very country, among which there are 80 SDO show the complexity of development, emphasizing on its social, economic thousand Peruvians. It was unanimously approved by the 193 UN countries. Its and environmental dimensions. This is why they are comprehensive and goal is clear: to have a world where nobody stays behind. undividable. It is virtually impossible to move forward in one of them without moving forward in the rest. 2016. It moved tenths of millions of dollars a month in that, in order to eradicate poverty, we need innovation. microloans. The same experience was imitated in over 50 For example, why not deriving a part of the funds we countries, including marginalized areas in the United States. recover from drug trafficking, or money laundering, or any fraudulent activities, to finance micro projects led by The work of Yunus, AKA as “the banker of the poor”, has women from the Peruvian Andes? If we want a similar called the attention of the world. However, the Grameen experience in Peru, we have what we need: poor people’s philosophy is not charity: it is a solidary loan, which can creativity, their attitude towards work and their decision to allow a peasant to buy what she needs to make cheese stop suffering. and sell it, or a woman in a marginalized area to do the same in order to make cakes and sell them. Basically, they These are the principles that drive us to promote the spirit are small ventures that would allow to cover the costs of a of solidarity from a different approach, one that does not family menu and that are not working because the family think charity should be used as a tool to help others. The doesn’t have a minimum capital, or because families refuse option is being solidary, but considering people’s dignity to fall prey to usurers. and potential.

This proposal could be used in Peru today, where the search The term “solidarity” was formed with the moral reference for a solution to extreme poverty, particularly in rural areas, of a world that tends towards hedonism. Being solidary has been one of the biggest issues for decades. A society means many things, and one can be solidary in many ways: must not hesitate to act in order to reverse extreme poverty. when States practice the principles of equality and justice, It is not possible to continue with inefficient management when governments prioritize policies that help low income styles that dilapidate the resources they should use tp people and when businesses assume a responsibility fight it, or to keep using assistentialist policies that, instead towards their social surroundings. of being a creative answer for the poor, promote their self- abandonment or conformism. Society also plays an important role regarding its solidary value: volunteer networks appear and, even though they In the design of State policies there should be programs have different quantities and qualities, they have the same that include the economically weak inhabitants in society. social function and the same common goal to serve their In a nation such as ours, however, scarce resources community. must be well used: we must teach them how to fish. An institution such as Grameen should enter the national In a country of entrepreneurs, the solidary revolution scene, which we could achieve if we had a true promoting will determine changes that, besides encouraging the and facilitating State, and a ruling class that firmly believes protection of the environment, human rights and children,

128 Raúl Diez Canseco Terry Peru: land of opportunities 129 will recognize the potential humans have to succeed on On the other hand, why are people talking about honesty, their own. It will promote a different model of solidary transparency or ethical behavior in world economic forums? culture that can secure social harmony. Solidarity is one Because globalization, the advancements in genetics, of the main values of modern societies and is essential biotechnology, nanotechnology and their uncertainties to guarantee human co-existence. As the deceased Holy create fears that take us to rediscover the essential values Father John Paul II said: “there will be no lasting peace if that secure our survival. it does not come with equity, truth, justice and solidarity”. This is why we must work to globalize solidarity. So, what world are we leaving for those who come after us? Differently put, what children are we leaving to the A country with values world? Both questions invite us to reflect on the influence of community, about the individual, their values and their Peru’s most critical values are linked to the weakening of contribution to society. universal principles and moral values. The political crisis in the ‘90s was the manifestation of a political model Education remains the great social pulley of value that privileged pragmatism over ethical principles. The transmission that every society should preserve. This is end justified the means, and the buying and selling of why we need an educational system with the mission to consciousness degraded the nation’s moral values. These transmit scientific or technical knowledge and shape a problems still exist and, maybe, are even stronger. If we citizen consciousness engaged with the defense of moral analyze the national scene of the end of 2019, we see concepts. How do we face a world in which all things seem the sad show of our politics, where everything is fair for possible, in a society in which time is becoming scarcer the actors in order to achieve personal goals. Where are every day, and when we live in hard, foggy times? First, principles, doctrine, premises, values, virtues and co- by strengthening an ethical consciousness, which is not existing styles? One wonders: what country grows on this remote or abstract, but a force in action. group’s interests? Ethical values and moral sociability are essential in a These are all signs of society’s moral deficit, and they form healthy country and the happiness of its members. a scene that affects our life and the country’s development Contrary to that, corruption, arrogance, lie, injustice and possibilities. Trust, order, solidarity, mutual respect, among violence, among others, are anti-values that degrade others, are collective values that leaders all around the human co-existence. globe appreciate in politics, economy and business. In a report called “Peru: citizen perception on governability, democracy and trust in the institutions” (2018), INEI claims

130 Raúl Diez Canseco Terry Peru: land of opportunities 131 that corruption (49.5%) and delinquency (43%) are the main problems in the country. The data suggests that corruption is linked to political power, such as the traffic of influences, taking a percentage of contracts and biddings, embezzlement, compulsive discounts, among other indicators. Poverty is third, with 19.6%. According to a report by the General Comptroller of the Republic, around 17 billion soles are lost due to corruption activity. The mistrust and disrepute of public and private institutions is alarming. At the head of the ranking of mistrusted institutions, we have political parties, followed by the Congress of the Republic. Radio and TV (72.2%), as well as the written press (78.2%) do not escape this negative perception.

Corruption, which entered Latin America and the Caribbean political and social tissue like a cancer, has a decisive influence in the economic progress of the region. According to another study of International Transparency (Global Barometer of Corruption, 2019), more than half of the citizens in this part of the planet think corruption is increasing and that their governments do not do enough to fight it. Peruvians are among this group. The report also reveals that 20% of the interviewees has had to bribe someone in order to access a basic service like water, electricity, healthcare or education. The most affected countries are Venezuela, where 50% claims to have payed, Muhammad Yunus, 2006 Nobel Peace Price, AKA “the banker of the poor”. The Garmeen Bank has a relevant particuñarity: 95% of its beneficiaries are poor Mexico (34%) and Peru (30%). Also, we can infer from this women. This is because, according to Yunus, the money that women bring to the survey that bad political practices are linked to elections: household is much more beneficial for the families than the money men bring. 65% perceives that their representatives are influenced by private interests, and 25% claims that they have been

132 Raúl Diez Canseco Terry Peru: land of opportunities 133 offered money in exchange for their vote. This study also environment: they may prefer them as a more stable source highlights that corruption affect women in particular; they of work. This is why the world’s main business schools are forced more often to bribe someone in exchange for include courses on business ethics in their executive health and education services. Also, one in every five training programs, which shows its importance. On the women has been sexually extorted. other hand, big companies also establish ethical codes that their directors and employees must respect when A modern country is based on virtues and values, on they start working there. ethics and morality as the foundations of a collective, solidary, entrepreneur spirit that looks towards the future. This is why young people’s answers regarding values is comforting. For example, the students who went to the University CADE in the past few years, which slogan was “Creating change: our challenge”: they will be the ones who will lead the destiny of the country. When asked by the survey about the values they try to practice in their everyday life, they said: responsibility, 34%; creativity/wit, 31%; honesty, 28%. Even though they are growing, these percentages show that there is still a lot to do.

From a business approach, some aspects mark the difference of people in business: honesty and respect are fundamental values of the new business culture. The modern business person understands that business behavior that matches fundamental values are not only a moral duty, but also, in the long run, give an added value to their company.

Values improve the image of a company when it interacts with the authorities, clients, providers, competitors, staff and financial entities. Also, the differentiation of its image can be attractive for young people who are less loyal to companies due to the intrinsic uncertainty of the

134 Raúl Diez Canseco Terry Peru: land of opportunities 135 VII A COUNTRY OF ENTREPRENEURS or almost a decade (2000 – 2010), analysts and investors considered the emergent economies of F Latin America and the Caribbean (LAC) to be the new motors of world growth. The development of our countries awoke an enthusiasm that, after a brief pause during the crisis of 2008, cemented on the vigorous recoveries of 2009 and 2010. This way, we had a new scene: thanks to the radical structural changes, both national and international, the potential of emergent economies was finally confirmed. Peru’s GDP in 2010 was 8.8%. However, during the past decade, this enthusiasm has subsided. The obvious deceleration of emergent markets has cast doubt on the sustainability of the last’s decades’ high growth and has reawakened the old fear to financial and macroeconomic turbulence. In 2019, Peru’s GDP only reached 2.3%. This does not mean that the enthusiasm over emergent LAC markets isn’t justified. Quite the opposite: it is sustained on the unprecedented social progress the region has acquired during the last growth boom, and it shows in the reduction of poverty for millions of people, and others who joined the expansion of the middle class.

Peru: land of opportunities 139 In Peru, the reduction of poverty has been the result of 14 in the world when it comes to businesses that close social policies than transferred the income to poor people. (6.2%). During the last survey, this indicator has shown a Social programs can be maintained in the short term, slight decreasing tendency, however, it is still above the but they are at risk to be closed down if low growth is Latin American average (5.2%). This disparity happens maintained for a long period. With the reduction of the because, in Peru and many LAC countries, its location on economic dynamism in China, the United States and the the entrepreneurship ranking does not match its location European Union, which favored the region during past on the innovation ranking. According to a report by the decades, our countries will have to use their own resources Global Innovation Index 2019, Peru is number 69 of 130 in order to encourage growth. world economies, and is up 2 positions compared to 2018 due to its progress in human capital, research and The productivity challenge is urgent precisely because innovation, despite the small investment in research and social progress is linked to growth. When internal savings innovation. On the other hand, GEM 2017 – 2018 shows are relatively scarce and the investment of foreign capitals that only 17.8% of all early ventures have an innovating is decreasing, only an increase in productivity can sustain offer (new products and services for consumers, and with the income growth. The leaders of the region are completely little direct competition). aware of the importance of encouraging productivity but, what constitutes this battle? It regards the formation of an One factor that explains this delay when it comes to entrepreneur, innovative class, so that the best companies innovation is the large amount of informal entrepreneurs (meaning the ones that export goods, services and even that are a part of the labor market. This is a distinction of capital) are no longer second class compared to the star developing countries. In Peru, almost 3 out of 4 workers entrepreneurs from other places. First, we must explore of the Economically Active Population (EAP) that currently the challenges Peruvian entrepreneurs face in order to have a job, work in an informal company, according to INEI increase their growth potential. (2019). This situation is even worse if we consider that, in the case of the younger generation and people over 65 Entrepreneurship and competitiveness years of age, 9 out of 10 work informally. This way, the According to the Global Entrepreneurship Monitor (GEM) informal sector absorbs 61% of available jobs. However, report, which measures the entrepreneurship rate in 54 its production represents less than one fifth of the GDP. countries, Peru was the fifth economy with the highest The gap between the work productivity of the formal and entrepreneur spirit, and the first one in 11 Latin American informal sectors, is 7.1 in favor of the first, according to the and Caribbean countries that entered the study. However, Institute of Economy and Business Development of the according to the same GEM report, our country is number Chamber of Commerce of Lima (2019).

140 Raúl Diez Canseco Terry Peru: land of opportunities 141 Business formalization remains a challenge for the entrepreneurs worse. The lack of financial instruments is encouragement of entrepreneurship, but why does it also obvious, which is a limitation for future operations of happen? One aspect is the lack of norms that explicitly new companies. support the new businesses’ activities as well as their formal creation. There is still a lot of bureaucracy in Formal financial institutions are offering products that are order to obtain permits and licenses for micro and macro competitive and that adapt to the interests of excluded businesses, which elevates costs and favors informality. population. This situation becomes worse when it comes to Even though bureaucracy restrictions are still strong vulnerable groups, such as women, rural population, people in our countries, the time needed to create a business with only primary education and people with lower income. has reduced to half in less than 10 years. However, this Informal loans are more expensive due to their elevated significant time reduction has not increased the rate of interest rates, which decapitalizes the entrepreneur. formal businesses. According to GEM 2016, 1,3% of Also, informal savings are unsafe because they are not Peruvian entrepreneurs blamed bureaucracy for the failure protected by a deposit insurance. The restricted access of their businesses. On the one hand, this makes us think the financial system results in an insufficient coverage and that administrative obstacles are not the most important development of financial infrastructure and distribution issues when it comes to formalizing businesses and, on channels (bank offices, ATMs, internet bank, mobile bank, the other, that reducing bureaucracy barriers alone is not enough to encourage formalization, at least not without other reforms.

Searching for seed money According to the World Bank, Peru has the most favorable environment to develop microfinances internationally. However, it is one of the countries in the region with the lowest levels of finance inclusion. Most experts and researchers from GEM 2017-2018 claim that financing is the main barrier for entrepreneurship, particularly for early-phase entrepreneurs (those who are just starting a business, owners of managers with businesses that have been working for less than 3.5 years). If they had it, they would pay a lot for it, which makes the situation for young

142 Raúl Diez Canseco Terry Peru: land of opportunities 143 etc). According to the Superintendeci of Banks, Insurance order to succeed, we must change the current paradigm, and Pension Fund Administrators, 44% of districts had which emphasizes the support to small companies, for no financing access in 2015 in Peru, and 30% showed an a paradigm that focuses on supporting young, newly insufficient access with only one place, mainly communal created businesses. agents or ATMs. Betting on new businesses Since semi-formal financial institutions that offer financial In relation to other countries or regions with similar services to impoverished or excluded clients, such as development levels, Peru is behind. This is due to the NGOs and cooperatives, are barely regulated, if at all, nature of its businesses: when they are created, they tend over indebtedness and late payment, which are usually to have less employees. According to GEM 2016, 33.6% linked to lack of information and transparency. This data of young entrepreneurs in Chile wanted to hire six or more seems right at first sight, but it is hard to categorically employees during the five years. In Argentina, it was 18% affirm that the lack of access to financing is an important and, in Peru, only 16%. reason for the region’s innovation gap. A study performed by the World Bank shows that, even though the access to The experts conclude that new Latin-American companies financing services such as long-term loans and risk capital do not grow as much as other regions’; they remain for young and small companies in the region may be lower small. Those who are responsible for State policies have than expected, Peruvian companies do not have more approached the lack of business growth by focusing on access restrictions than companies from other regions that this type of company. This issue, as well as employment, stand out because of their competitiveness. translate into a set of government programs to support small and medium companies (SME), as is the case in Peru, As stated in a report called “Financial Development in LAC despite their small contribution to quality employment (De la Torre, Ize and Schmukler, 2012), the bank credit creation. This is why a World Bank report questions the gap in this region is due to its financial turbulence and the excessive emphasis different States put on the size of lack of promising, productive projects (meaning, the lack companies and suggest they focus their attention on of innovation), more than to bank rationing of credit and young companies instead. In this sense, it is remarkable credit restrictions. Also, the restriction that seems more that 24.6% of Peruvians are involved in early-age ventures, relevant for the offer of bank credits is the weakness of the implementation of a business or are the owners or the contractual environment, which ca undermine both managers of companies under 3.5 years. In this context, the offer of credit and entrepreneur innovation. In that Peru has the third place in the world ranking. sense, State policies are essential for approaching the gap in business formalization and growth. I think that, in

144 Raúl Diez Canseco Terry Peru: land of opportunities 145 The empirical evidence on which these proposal is based At the same time, established ventures (businesses that comes from the detailed analysis of how new business have been working for over 3.5 years), which represent work. The growth of a business increases with size and a 7.4%, have more initiatives in manufacturing and decreases with age. Thus, it is unlikely for a company that transportation. Business that offer IT, financial and did not grow quickly at its beginning or middle stage will professional services are fewer. take off. Companies of all sizes grow more in their initial years, especially during the first four. It is even more An important change over the last few years was the interesting that average growth rates increase according predisposition that opportunity-motivated entrepreneurs to the company’s size: the companies that grow the most have for developing their business initiatives compared are both young and large, which also create more jobs. to established entrepreneurs, which encourages better results. However, in both groups, most business initiatives The impact of entrepreneurship are carried out by only one owner. Most of these opportunity-motivated entrepreneurs are men with a Knowing growth expectations and the aspirations of higher education. Within this segment of entrepreneurs young Peruvian entrepreneurs in their early stage is lies the highest potential for the development of highly essential for determining the impact of entrepreneurship. innovative initiatives, so this group is crucial for the This is because it allow to asses the growth potential and development of government programs and policies. measure the impact they could have in the economy and society, which means not only creating more jobs, but Early-stage ventures tend to be developed by younger better ones. Here, Peruvians’ entrepreneurship intentions people, compared to established ventures. The average are high: 43.2% want to start a business in the next 3 years. age of early-stage entrepreneurs is 36, and 74.3% is between 18 and 44 years old. There were also According to these historical data, there is a certain link differences in the analysis of motivation-driven early stage between the country’s economic development stages entrepreneurs. Early-stage entrepreneurs motivated by and the new businesses’ economic sectors: the more need are mostly women and have more extreme ages, they are based on efficiency and innovation, the more compared to opportunity-driven entrepreneurs. Another competitive they become. However, the numbers do not interesting difference is that, according to GEM 2013, favor them. While looking at the economic sectors where Peru was the fifth with more entrepreneurial activity in entrepreneurs participate at an early stage, 24.6% are the ranking of countries with efficiency-based economies, mainly oriented to retail and wholesale, which is above the yet nearly 40% of entrepreneurs had yet to create a new Latin American average and the average in efficiency-based job post besides their own during the first five years of economies, meaning industrialization-based economies their business. Today, 61.3% of early-stage ventures has and economies of scale, such as Peru.

146 Raúl Diez Canseco Terry Peru: land of opportunities 147 at least one payed employee besides the owner, and opportunity-motivated businesses hire more employees compared to need-motivated ones.

The challenge of innovation There are many possible reasons for which LAC businesses grow as slowly as they do, and one of them is the lack of innovation. The creation of a business is just the beginning of the story, because companies need to continuously innovate in order to grow, or even to survive.

A well-known case is Kodak: in 1998, it had 170000 employees and sold 85% of photography paper around the world but, in only a few years, their commercial model disappeared and went broke. Today, Uber is the largest taxi business in the world and it does not own one single vehicle, and AirBnB is one of the best hotel companies at a global level, but it does not own real estate. We are currently living the revolution of nanotechnology, artificial intelligence, drones and 3D printers which, according to the Davos Economic Forum, are the architects of the Fourth Industrial Revolution. Let’s explore the fields in which this Fourth Industrial Revolution will take place:

1) Artificial Intelligence  A computer has already defeated the best Go player in the world, ten years before it was expected.

 Anybody who is going to law school should be careful: in the USA, young lawyers are no longer Bombay, India, 2010. Presentation of the Priyadarshini Academy Global Awards, finding jobs because of IBM Watson, where a considered as the Indian Nobel prize in the East. person can get legal advice in seconds (for a basic

Peru: land of opportunities 149 sum) with 90% accuracy, compared to 70% accuracy  Insurance companies will have a big problem when the same task is performed by humans. because, with no accidents, insurances will become much cheaper.  Facebook already has a pattern recognition software than can identify faces better than humans can. 3) Health  Star Trek’s Tricorder is already a reality: it detects 2) Self-driving Vehicles 34 diseases through sensors. We already have In 2018 the first self-driven vehicles became available to something very close to it called DxtER, which the public, and many people are thinking about not buying was developed by a small company called Final a car: they will simply call one on the phone, which will Frontier Medical Devices. This device uses non- appear at their house and will charge them only for the invasive sensors to collect data and contrast them route. And what are its benefits? to an artificial intelligence engine with a medical database that can diagnose 34 diseases such as  You can otherwise use your time on your way. diabetes and hepatitis A. It will be cheap, so in a few years, everybody will have access to excellent  If you can work on your way, people will move medicine almost free. further to live in safer neighborhoods. The impact will show on real estate.  IBM Watson is helping doctors make decisions when managing the clinical and pharmacological  Our children will never need to get a driver’s license treatment of lung cancer patients. and will never own a vehicle.  We have the Moodies Emotions Analytics app,  There will be less noise and pollution, we will need which focuses on the analysis of our emotions 90-95% fewer cars, and new cars will be electric. when we speak, as well as our secondary mood,  Parking lots can become parks. which is the one express the least. Imagine a political debate or a trial in which we can see who  Every year, 1.35 million people die in car accidents is telling the truth and when. worldwide. Thanks to self-driving vehicles, we will only have one accident every 100000 kilometers. 4) 3D printing This will save one million lives a year. The cheapest 3D printer went down from 18000 to 400 USD in 10 years. It also became 100 times faster. About  Most car companies will go bankrupt. its impact?

150 Raúl Diez Canseco Terry Peru: land of opportunities 151  The most important shoe companies started 3D jobs, but it is unclear if there will be enough jobs in printing shoes. such a short period.

 Plane spare parts are being 3D printed in some  There will be a 100-dollar agricultural robot. airports. Imagine our farmers as administrators of their lands, instead of working every day under the sun.  Space stations have a printer that eliminates the need for many spare parts they used to have. 7) Food  We will be able to 3D scan with our smartphones,  The first petri dish created veal is now available, which will allow us to scan our feet and print out and it will be cheaper than natural born veal. perfect shoes at home.  Several emerging businesses will shortly extract  In China, they have printed a whole 6 floor tall insect protein and put it in the market. This type of building. protein has more nutritive than meat and it will be known as “the alternative source of protein”, given  For the year 2027, 10% of every item produce will the fact that most people still rejects the idea of have 3D printing. eating insects.

5) Business opportunities 8) Longevity If you think about a business sector in which you are Currently, average life expectancy grows 3 months a year. interested, ask yourself the following question: will we Four years ago, life expectancy was 79 years old; today it have the same needs in the future? If the answer is yes, is 80 years old. In 2036, the increase will be of one more what can you do for those needs to survive before the year of life expectancy pear year. This way, we could live sector disappears? much longer, probably over 100 years.

Any idea designed to succeed today is doomed to change 9) Education tomorrow. Innovative changes are vertiginous. The cheapest smartphones already cost 10 USD in Africa and Asia. Until 2020, 70% of humans had a smartphone 6) Work or a laptop. This means that every human being has the  Between 70 and 80% of known jobs will disappear same access to education all over the world. within the next 20 years. There will be many new

152 Raúl Diez Canseco Terry Peru: land of opportunities 153 10) Energy  Electricity will become incredibly cheap and clean.

 Solar energy is already starting to replace fossil energy around the world. The price of solar energy will become so low that all coal companies will have disappeared in 2025.

 Cheap electricity brings cheap, abundant water. Today, desalinization only requires 2kWh per cubic meter. We don’t have water scarcity in most places; only drinkable water scarcity. Imagine what would happen if we could all have all the clean water we wanted virtually free.

All of this and more will happen in the immediate future. According to the GE Global Innovation Barometer 2016, 70% of executives worldwide have positive expectations regarding the deep world transformation. This study claims that emerging markets – particularly Asia, are adopting more disruptive innovation that their developed economies counterparts. Business people and citizens agree that the most innovative companies create completely new markets or products instead of improving or repeating the ones that already exist. Being disruptive is the golden standard for companies, but it is still a complicated goal: the new startup culture offers a new model that faces and challenges existing policies and work ways. According to the GE Global Innovation Barometer 2016, 81% of executives fight to have radical ideas, and only 24% feels

their business is functioning the right way and quickly As a part of his global initiatives, in September 2018 USIL presented a modern adapting to emerging technologies under the pressure digital educational platform in the Peruvian Consulate in New York to teach Peruvian cuisine through online interactive courses. It is a modern teaching method that mixes cuisine and new information technologies to share the theoretical-practical knowledge of Peruvian cuisine with the world.

154 Raúl Diez Canseco Terry of “digital Darwinism”. This means that businesses will It is worrisome that the profile of entrepreneurial activities survive as long as they are permanently innovating. associated to information, communications and technology show no sign of growth, and that Peru is number 55 in If we analyze the GEM 2017-2018 study, 17.8% of a world ranking of 60 countries, whereas Argentina is Peruvian entrepreneurs offer an innovative product. A number 34. In the case of finances, the case of Peru is generalized trend in Peru is the use of technologies that are disastrous: it has a 0%. over 5 years old. Even more so, in 2013 only 0.4% of young entrepreneurs said they worked in the high and medium New management in the era of artificial intelligence technology sector, such as software, biotechnology, The qualities of business management practices is an telecommunications, plastics, pharmaceutics, etc. additional dimension we must take into account in this new age of innovating entrepreneurship. With the exception of The opening of new markets Mexico, LAC countries practices are more similar to Chinese Despite the extraordinary growth of our countries and Indian companies than to high-income countries. Given during the first decade of the new millennium, there are that companies in our regions have higher work costs than reasons to doubt the sustainability of these growth rates Chinese and Indian companies, bad management means in the long term, especially if it was linked to the rise of a more severe competitive disadvantage. raw materials. In that sense, it is fundamental for young entrepreneurs to dare look for new markets not only inside Allow me to make a confession: experienced entrepreneurs, their economies but, particularly, outside. Even a small in general, do not have time to generate knowledge about number of entrepreneurs is trying to enter new markets, our everyday tasks because our efforts focus on making our there are many others whose activity takes place in highly business grow and using new development opportunities competitive places of the local market. Even more so, in favor of the country. Academicians, on the other hand, the percentage of businesses with a strong international have the time and the space to reflect about the elements orientation (whose foreign clients are more than one that create success or failure in a new venture and, based quarter of their total clients) has declined in comparison on that, generating new business models. to past years. According to GEM 2015, the entrepreneurial activities that generate more dynamism are, in the first Unlike before, when things could be improvised, now place, consumer-oriented (retail, restaurants, bars, health, entrepreneurs need a solid technical and academic training education, social and personal services), with 80.9% to efficiently manage their businesses, as well as financial followed by agricultural activities, with a 7.6%. backup and a permanent innovation vocation. Specialists think unanimously that economy today is more creative,

156 Raúl Diez Canseco Terry Peru: land of opportunities 157 digital, automated and global. It is not enough for today’s countries with 403 points, right after Chile, which has entrepreneur to have basic skills in new technologies 432 points. This corroborates the CAF Latin American if they are not conveniently accompanied by cognitive Bank of Development (2011)’s conclusions, which shows dexterity and other skills such as creativity, communication, that near 50% of Lima inhabitants who do not have a team work and perseverance. It is the absence of these bank account, does not know the requisites to open one. skills which might explain the region’s deficit regarding Another regional characteristic is the lack of human capital management and, therefore, innovation. –engineers and scientists- who might probably generate innovating entrepreneurs. The human capital stock of a Education and innovation country is often measured by the average schooling years A fundamental element that explains the lack of innovation of the active population and the quality of education, which is the human capital gap, particularly in the quality of is measured through standardized academic tests results. education. Experts say that education does not significantly However, the human capital that is linked to innovation promote entrepreneurship yet, and that it is a limiting and entrepreneurship needs a particular analysis. factor. Besides the low quality of public education, there is The chronical lack of a scientific and engineering training in no learning line related to the formation of entrepreneurial the country is worth examining. The number of engineers capabilities. Technical and productive programs are not valued, in LAC countries is below the median, and its quality is in general, we still have an employee generating model. lower than expected for its development level. In fact, the The lack of knowledge and trust on the financial system number of engineers is relatively low even in the most is a fundamental element for entrepreneurship. There is advanced countries in the region, like Brazil, Chile, Colombia a manifestly poor financial education. According to the and Mexico. For example, Peruvian mining industry has 50 World Bank, 37% of people who don’t have a savings billion dollar portfolio of projects, but these projects cannot account say that lack of trust is one of the reasons. This be carried out without around 5 thousand engineers lack of trust reflects the lack of information of potential with 15 years of experience and not will people who just users and their difficulty to understand how the financial graduated. There is, particularly, an unmet demand for system works. industrial, mechanical, electronic engineers, not because they don’t have the right training, but because they don’t In 2017, the results of the PISA test of financial education have any experience or specialization. A production showed that 51% of Peruvian students have a level manager needs to have knowledge in all of these fields. 2, which means a very low level in the development Having said this, it may be necessary to encourage of financial skills. Peru is the second last on a list of 14 engineering quite a lot, as well as a scientific high school

158 Raúl Diez Canseco Terry Peru: land of opportunities 159 education that increases the interest in those programs, entrepreneurship (16.7%), we still cannot see the expected as the United States did in the twentieth century or as innovative changes. We see that the main motivation for are doing a few schools in the European Union, teaching the opportunity-based entrepreneur is more the need for programming to children. more income than it is a desire for independence based on innovation. In order to understand why there is so much enthusiasm regarding entrepreneurship in our region, but little State policies that favor innovating entrepreneurs innovation, we need to differentiate the motivations that Acknowledging innovation as the key of growth, Yale lead people to start a business. professor Robert Shiller (2013) recently claimed that “capitalism is culture. To sustain it, laws and institutions Peru is high among the entrepreneur countries because it are important, but the more fundamental role is played by has what is known as need-motivated entrepreneurship. the basic human spirit of independence and initiative”. This means that, when you have no other options, you must “start a business” to pay the bills through, Entrepreneurs transform ideas into successful, therefore generally, a subsistence economy. In this case, “starting a profitable initiatives. In general, this transformation needs business” would be the same as selling cakes outside of singular talents, such as the capacity to innovate, the a church. On the other hand, choice or opportunity-based introduction of new products and the exploration of new entrepreneurship, in which the main motivation is using markets. This process also requires skill to lead other people, market opportunities in order to generate income, as it to prioritize tasks in order to increase productive efficiency happens in developed countries, will be an independent and give the best possible use to all available resources. job with an innovation charge. However, these skills are not enough. Entrepreneurs thrive when the economic and institutional environment In advanced economies, “starting a business” is creating is favorable and encourages results from innovation. When a technology-based business or inventing something that the environment is right, entrepreneurs take risks and does not exist in the market. Be a part of something different, invest in innovation, thus stimulating market productivity. with the support of a knowledgeable entrepreneur who bases on an ecosystem where investors are fighting to Why should governments care about entrepreneurs? The finance their project. answer is simple: entrepreneurship is a fundamental driving force of growth and development. The basic premise is In Peru, in spite of a change in the motivation of that leader entrepreneurs are not simply a consequence entrepreneurial initiatives in favor of opportunity- of development, but their promoters. Entrepreneurs based businesses (62%) compared to need-based play a crucial role in the transformation of low-income

160 Raúl Diez Canseco Terry Peru: land of opportunities 161 societies, characterized by low productivity and, often, by subsistence self-employment in dynamic economies with innovation and a large number of well payed workers. This is why, as long as there is a link between entrepreneurship and productivity growth, it is fundamental to use State policies to accelerate the development process through the improvement of incentives and support that institutions give to entrepreneurial innovation.

I believe the three most important measures to encourage entrepreneurial activity should focus on:

1. Access to financing. Both in the private and public sector, we must emphasize on the creation of competitive funds to finance innovating projects with a high impact on productive and technologic development that can be competitive regionally or globally. Not only the business ecosystem will benefit from these programs, but also the widening of the country’s financial system based on innovation, competitiveness and productivity with social inclusion. One crucial mechanism is the creation of a support net that maximizes the relationship between every agent in the entrepreneur ecosystem to join efforts and identify synergies. It is essential to create and strengthen dialog platforms in the financial system so we ca analyze and debate the financial inclusion of the entrepreneurs.

One vital element in the improvement of the support network is the telecommunications’ connectivity

University of South Florida (USF), June 2015. Raúl Diez Canseco Terry receives coverage and to overcome cost barriers as well the President’s Global Leadership Award due to his distinguished career in the educational sector. With him, Judy Genshaft, USF president, and Harold Mullis, USF directive.

Peru: land of opportunities 163 as the difficult geographical access. We should 3. An entrepreneurial education. As previously stated, use cellphone and digital technology to increase the sensitization about creating products and bankization through non traditional channels, such improving their environment must be promoted in as mobile or digital banks, both for transactions early childhood, particularly with the use of new and for the confidentiality of information for the technologies. benefit of entrepreneurs, turning them into more secure partners for inclusion. High school students must receive training in administration and finances, as well as guidelines 2. Public policies. An entrepreneurship law must be that teach them how to do exploratory market and considered a State need in order to encourage opportunity research. They also must learn agile, innovation-based entrepreneurship and the dynamic methodologies that help them create improvement of businesses’ competitiveness. innovating businesses, particularly in the high- This way, private investments in high growth tech services. entrepreneurial projects will benefit. Also, special tax and work laws must be adapted to entrepreneurs On the other hand, financial training must be during the first few years of the company. accessible along every stage life, thus ensuring impartiality and objectivity in training policies and We could consider the creation of an autonomous the adaptation of educational programs to the entity with technical and specialized capability for specific needs of the population segment they are the promotion of new ventures and that acts as the intended for. It is also fundamental to highlight the central axis of all entrepreneurship encouraging need of cooperation between all parties involved policy, avoids double efforts and optimizes financial to facilitate the exchange of better practices. resources. Another one of its functions would be to procure the joint work of all the agents in the I am convinced that Peru is the country of entrepreneurial ecosystem, as similar experiences opportunities and that entrepreneurship has no have shown in Chile and Mexico. In that sense, it is limits, but we need to take the next step: quality fundamental to create an entrepreneurs’ network, entrepreneurship, prioritizing creativity, innovation so they can exchange experiences between and excellency in whatever goods or services they incubators and transfer technology among may offer. This is why, in this new stage, the concept entrepreneurship support centers. of entrepreneurship includes entrepreneurs and younger businesses that originate in university classrooms.

164 Raúl Diez Canseco Terry Peru: land of opportunities 165 We entrepreneurs must lead by example, and we believe that those who have reached success and have the privilege to lead their companies should commit to sharing their experiences with those who are just starting in the entrepreneurship and innovation world. We would like for more Peruvians and institutions, particularly educational institutions, to contribute to the task of creating a twenty-first century entrepreneurial culture. As time goes by, if we win the battle of productivity, we will enter a virtuous circle of stronger markets, more growth and opportunities for all.

166 Raúl Diez Canseco Terry VIII STARTING UP, ALWAYS STARTING UP. uman beings undertake projects all along our lives, whether it is looking for a way to get out of bed H as soon as the alarm rings, a means of transport that takes us safely and timely to where we want to go or doing a certain economic or philanthropic activity that will give us economic, personal and social revenues.

Starting a business is a long-term race, it is a constant up and down because of the successes and falls we may have along the way. Knowing how to face the challenge any of the activities we do, no matter how small or brief, is essential. Thanks to my more than twenty years of entrepreneurial experience, I believe starting a business is a constant learning, which is why I try to reinforce my skills every day, but everything has a starting point. My first business was the foundation of the San Ignacio de Loyola Academy in 1970. Then, I brought the KFC and Pizza Hut franchises (1980 and 1982, respectively). Since 1983, I focused on the educational service. That year I founded the San Ignacio de Loyola Institute. Two years later, in 1985, the San Ignacio de Recalde School in Lima and, in 1987, a school with the same name in Asuncion, Paraguay.

Peru: land of opportunities 171 The following startups were in the university education Romero’s support was essential. He is the president of sector. In 1996 I founded San Ignacio de Loyola University BCP (Peruvian Bank of Credit) and the Romero Group. and, in 1998, I created the post-graduate school. In USIL Also, Efraín Wong and his brothers’ support. Later, after we promote Peruvian cuisine in the world: in 2005, we the initiative’s success, other important institutions and inaugurated the Chef School. Then came the reaching both national and international solidary corporations began restaurant Don Ignacio and, in 2007, Di Patisserie bakery. participating, such as the Spanish Agency for International Three years later, in 2008, I started the first Peruvian Chef Cooperation (AECI), the Chamber of Commerce of Lima, the School Miami, the San Ignacio Culinary Arts, that later National Chamber of Tourism, the Development Finance became San Ignacio University. Corporation (COFIDE), the National Superintendency of Tax Administration (SUNAT), USAID and Cosude- For the past thirty years, I’ve had the opportunity to Swisscontact. As the years went by, the Inter-American travel around Peru thanks to the invitations I received Development Bank (IDB), the Andean Development from different universities to share my entrepreneurial Corporation (CAF) and the Community of Madrid. experience. I spoke of my beginnings in the franchise business and in the promotion of education. In all those 1. Creer para crear program (1998-2013) travels, I met many entrepreneurs that wanted to create It was PROBIDE’s first program and institutional a business, but didn’t know how. Young people told me foundation. It was presented on October 15, 1998 at the that one of the barriers they always found was the lack National Society of Industries (SIN). of access to financing to begin. As a consequence of these conversations and experience exchange with young Creer para Crear was preceded by the results of the first people, I decide to propose the design of a program that National Competition of Young Entrepreneurs, PROBIDE’s would allow them to learn how to create an investment pilot, which summoned over 45000 participants for project, to get training, and to get financing. This way. In the conferences, seminaries and talks. The spark of 1998 we took the first step with the creation of an NGO, entrepreneurship ignited in over 1500 young people who Pro Wellbeing and Development Association (PROBIDE), presented 453 projects nationwide. a nonprofit aiming to promote business training, creativity, innovation, sustainability and competitiveness culture in In July 1999, after a long, rigorous evaluation by INDECOPI Peruvian young people. (National Institute for the Defense of Competition and Intellectual Property), 32 projects were validated by sponsor At its early stages, PROBIDE had the support of Peruvian companies. These initiatives involved 117 students from all companies to sustain potential entrepreneurs’ enthusiasm around the country who became the first generation of and good ideas. During this inaugural phase, Dionisio young business people from the PROBIDE project.

172 Raúl Diez Canseco Terry Peru: land of opportunities 173 After the contest’s success, the plan escalated with the Creer para crear innovated in the way to start a business support of the IBD and with the creation of the Guarantee putting the concept of venture capital as a source of support Fund it offered, which allowed the financing of more for business projects and investment opportunities in all projects. Creer para crear lasted for 10 years, as agreed socioeconomic sectors. Through this program, PROBIDE with this international institution, which is the main source was the first NGO to apply trust funds as a financial object of financing for the economic, institutional and social so that banks would give small loans to hundreds of new development of Latin America and the Caribbean. The IBD projects, to such extent that now banks offer this type of became the guarantor for new business proposals, and products, just like Caja Municipal de Ahorro y Créditos, supported the projects that won the contest. This allowed Rural cajas, among others. low-income young people to meet their warranty need to access bank financing. Success sotries EL AUTOMÁTICO – mechanized carrot washing machine The main lines of action for the support to micro business Chupaca – Junin creation were the potentiation of microloans, business Financing: Bank of Credit of Peru consultancies, training, project incubation, market research, 19000 dollars training for trainers, and training for volunteers. This is one of the most representative projects of the The program had a remarkable success: program due to its growth. It begun with an operational  16000 young people were trained in investment capacity that allowed it to wash 5 tons of carrots per day, projects elaboration. and today it washes 60 tons. It intends to install new washing tanks in Arequipa and Bolivia. Currently, PROBIDE  5119 business ideas were identified, most of them supports de design and presentation of entrepreneurship coming from inner provinces. advertising in the region, as well as the negotiations for the commercialization of the product in Wong supermarkets.  130 businesses guarantied for financing entities. “I never thought I would have the chance to develop my  9817 collateral beneficiaries in young people who inventing capacity far away from Lima and, at the same participated in project creation workshops. time, put such a quick and efficient cleaning system at the service of carrot producers from my region, Chupaca, in  3000 people went to international conferences. Junin. This system replaces the washing process in the Cunas river”. Luis Antezano Vílchez, general manager.

174 Raúl Diez Canseco Terry Peru: land of opportunities 175 HELICONIAS DEL ORIENTE – exotic flowers trade. Pucallpa – Ucayali Financing: Bank of Credit of Peru 6000 dollars

This business trades exotic flowers that grow in the region, has specialized technical staff and offers gardening services to institutions and natural persons. Their marketing plan focuses on the positioning of their brand through sponsorship in social events.

INDUSTRIAS SISA S.A.C. – sacha inchi-based products trade and production La Molina, Lima Financing: Continental Bank 15000 dollars

This company started working by making sacha inchi seed snacks and, after building their industrial plant in Los Olivos district, it has expanded their offer to vegetable oil products, gourmet creams and sauces, which are sold to the main supermarkets (Wong, Vivanda, Tottus) and exported to France, Belgium, Spain and the United States.

“My grandmother Judith Reátegui del Águila used to prepare a delicious soup called inchicapi, made of peanuts and toasted sacha inchi. She also spoiled us with inchicucho sauce, which we used to spread on boiled yucca, and it was delicious. In order to make these dishes, she toasted the sacha inchi, also known as the peanuts of the Incas. This memory gave me the idea to create the sacha inchi snacks”.

Claudia Gonzales Valdivieso, general manager.

176 Raúl Diez Canseco Terry Peru: land of opportunities 177 DEPORT CENTER PERU S.A.C Synthetic court rent service Comas, Lima Financing: Continental Bank 16500 dollars

This Company has increased the court rent service in Comas (1) and Los Olivos (2) districts through agreements with educational centers that had unused terrains that were refurbished with infrastructure and fixtures.

MUSTIKUSIKUY S.R.L –Differentiated tour service with new routes at the Titicaca lake Titicaca lake, Puno Financing: Continental Bank 12081 dollars

There is a different tour service according to the target audience. They offer three types of tours: eco-tour, sunset tour and party tour. This business has a diffusion-based marketing plan with foreign tourists, who are their main source of income, and have developed a website showing their attributes. Also, it has established alliances with national and foreign tourism agencies.

SMALL COMPANY PIG – pork production and trade Characato, Arequipa Financing: Continental Bank 15000 dollars

This company is Camal Don Goyo’s main provider. Camal Don Goyo is the most important meat trader in Arequipa.

178 Raúl Diez Canseco Terry Small Company has its own office, which is also adapted HIDROAMÉRICA S.A.C. – civil sanitation work service for other animals and includes chickens and guinea pigs. Lima They also sell livestock viscera in local markets. Financing: Continental Bank 15000 dollars ZOO COCHAHUASI S.A.C. – wild flora and fauna zoo in Cusco This company has a select professional team, with Cochahuasi, Cusco technicians and operators that are qualified in sanitation Financing: Continetnal Bank services. It has an exclusivity contract with the most 16500 USD important company in the sector, Sedapal, to which it offers its services with high tech equipment. After overcoming the natural phenomena that ravaged their headquarters, they got a second loan to finish TRANSPORTES EMMY – construction materials refurbishing their infrastructure. Today, this business is a transportation (coarse sand, fine sand, concrete, crushed tourist attraction center in Cusco. stone) and land clearance Ate, Lima “In April 2008, with two macaws and one turtle as our main Financing: Bank of Credit of Peru attractions, the zoo was inaugurated with 10 kids who 15000 dollars came from a rural school nearby, and we earned two soles! Today, the main attraction in Cochahuasi is the Andean This company acquired a Volvo F716 dump truck, with condor, which has been trained to be in contact with the a 10M3 load volume. Transportes Emmy uses 100% of visitors and who is a part of the local touristic circuit. For their capacity and is now negotiating a new loan for the this, we have tour guides who speak English, French, purchase of a new unit. Its main clients are construction Portuguese and Italian, and our income has allowed us to companies in La Molina district. pay back the loan PROBIDE helped us obtain. Our project also contemplates the reproduction of the Andean condor, 2. Productive Development PROBIDE projects (2005 – a species from the Peruvian Andes, which is endangered. 2015). In 2001, I was elected vice-president of the Republic and Dante Chávez Álvarez, general manager. named Minister of Industry, Tourism and International Negotiations, which became the Ministry of Foreign Trade and Tourism in 2002. There, I encouraged the insertion of Peru in the international market through the free trade agreement. From 2005 on, I aimed PROBIDE towards the

180 Raúl Diez Canseco Terry Peru: land of opportunities 181 encouragement of entrepreneurship in order to rationally use the great variety of natural products Peru has, giving them added value and improving the economy of producer communities through training and consulting so they use modern techniques and state of the art equipment.

Thanks to the participation and financing of allies that share PROBIDE’s mission, this type of projects allowed producers from many regions in the country to elevate quality standards and competitiveness in their businesses. Also, these initiatives have allowed the contribution to the empowerment an development of women entrepreneurs.

MÓDULO DE FERMENTACIÓN – CITE CACAO Finacing: USIL (PROBIDE): 125000 dollars Cedro-USAID: 120000 dollars Andean Development Corporation (CAF): 125000 dollars

The Desarrollo del Centro de Innovación Tecnológica del Cacao project (CITE CACAO), in the San Martín region, aimed to strengthen the cacao productive chain through the improvement of crops and the processes of fermentation and drying, in order to obtain a better cacao grain and transform it into other products: liqueur, cocoa, chocolates, etc.

The program allowed us to train 90 producers in management, entrepreneurship, and systematization of technical-productive and commercial information. We also trained 150 technicians and workers so they use the opportunities offered by forest management of cacao.

182 Raúl Diez Canseco Terry Peru: land of opportunities 183 Also, 2500 producers were benefited with soil analysis to the large market in Lima. Thanks to this project, MSEs and clonal gardens to improve their fertilizing range and received technical consultancies for the improvement of produce their own clones, sprout branches and cacao their processes, procedures, infrastructure, and quality plantations. 25775 San Martin produces benefited from policies, and they could become providers of the Plaza Vea the program: 5675 producers associated to organization supermarket chain. s benefited directly and, 20000 non-associated ones benefited indirectly. The training included three The project was financed by the CAF, which gave 70098 fermentation module in Tocache, la Banda de Shilcayo and dollars to identify, select and train 150 SMEs so they would Calzada. reach the quality standards needed to sell to supermarkets in Huancayo, and then, in supermarkets nationwide. The total investment of the project was 370000 dollars. USIL contributed with 125000, Cedro-USAID, 120000, All participant SMEs, 70% of which came from the country and the Andean Development Corporation (CAF), 125000. side, offer cacao, processed oranges, coffee products, citruces, fruits, jams, honey, pollen and chilies. When the Homologation of providers in Junin training and evaluation process finished, 31 SMEs in La Financing: Andean Development Corporation (CAF). Merced, Chanchamayo, San Ramón, Pichanki and Satipo 70098 dollars were certified with SGS to become a part of Plaza Vea providers for processed or agricultural foods. The economy of the Junin region is based on mining, commerce, agriculture and construction, but it still needs PROBIDE won the Business Creativity contest under the to reinforce and improve the quality of its products so they name of Peru Pasión in the Social Commitment category in reach an exportation level. According to the Ministry of 2010 thanks to the implementation of the best innovating Production (2016), there were 56963 formal companies, practices in Peru, in different fields of business and social 55280 microbusinesses, 1537 small businesses, 43 development. medium businesses and 103 large businesses in Junin. FYNPYME MUJER EMPRESARIA Only 46% of them belong to the commerce sector, 39% to the service sector, and 8% to the manufacturing sector. Financing: Inter-American Investment Corporation (IIC) from the IDB One step to improve the economy in the region was the 376 858 dollars project Homologación de proveedores Plaza Vea region Junin, supported by San Ignacio de Loyola University, This program aimed to promote women’s empowerment, which allowed to connect MSEs in the center of the country developing their administration and economy skills. Also,

184 Raúl Diez Canseco Terry Peru: land of opportunities 185 it aimed to diagnose businesses in order to improve them, and organizing talks and workshops.

In order to carry it out, IIC approved a 376858 fund to develop four explicit phases with different activities exclusively focused on women-owned businesses.

The beneficiaries were 50 businesswomen who sold over 1 million soles a year with staff on their payroll. They also participated in related conferences to increase the competitiveness of their companies, and received technical assistance both individually and in groups. 32 companies finished the program.

MÓDULO DE FERMENTACIÓN – CITEXPOR Financing: Ministry of Foreign Trade and Tourism (MINCETUR) 400000 dollars

CITE CACAO’s success replicated in CITEXPOR with the funding of MINCETUR, who gave 400 thousand US dollars that allowed to build five fermentation modules. It had training programs in Cayena, Pajarillo, Machu Picchu (El Dorado), Campanilla and Awajún. The project allowed 150 farmers to get business management and export training.

CITEXPOR is a training and improvement center for international trade associated to the cacao sector. Its main goal is promoting industrial and technological development of cacao through the strengthening of producers’ competitiveness and the encouragement of a technological innovation, quality and efficient articulation entrepreneurial culture. CITEXPOR focused on improving

186 Raúl Diez Canseco Terry Peru: land of opportunities 187 the added value on exportable offers on two different axis USIL Ventures is one of 20 startup incubators/accelerator of the cacao chain and its products: “benefits of certified nationwide, supported by the Peruvian State through cacao” and “artisanal chocolate”. Through this project, new the National Program of Innovation for Competitiveness production, packaging, control and technical normative and Productivity (INNÓVATE Peru) of the Ministry of compliance processes were implemented, as well as a Production, aiming to increase business productivity by better physical export distribution, among other issues strengthening the agents of the innovation ecosystem linked to foreign trade. (businesses, entrepreneurs and support entities) and facilitating their interrelation. 3. PROBIDE technology initiatives In its technology and entrepreneurship system, PROBIDE Technologic Ecosystem has a vast project incubation and acceleration program in USIL Ventures’ incubation and acceleration model is the bio-business, hotel, tourism, cuisine, education and inspired in the best international practices and it includes: health sectors, which allows access to different training modules that adapt to each startup’s needs aiming to lead  An incubation and acceleration manual aiming them towards their maximum development. to systemize USIL Venture’s incubation and acceleration processes. An important ally for this program is San Ignacio de Loyola Educational Corporation, based in Lima and with branches  A modern coworking space in La Molina and Lima in Cusco and Arequipa and, internationally, Paraguay, the Norte, with high tech machines. United States and, soon, Bolivia. San Ignacio de Loyola  A startup management system software for the University has USIL Ventures, its own business incubator, followup and monitoring of the startups in the which is a member of PROBIDE. program.

USIL VENTURES  Our own mentor network, formed by prominent USIL’s startup incubator has developed an entrepreneurship- entrepreneurs, business people and national and oriented educational model, sowing educational DNA international professionals. in the university’s students through transversal courses all along their degrees. Thus, agile methodologies were  Telefónica’s Open Future Global Network’s only introduced in order to boost innovation and creativity with hub in Lima. Open Future is in Europe and Latin a technological approach, as well as the encouragement of America, and its hubs bring innovation and dynamic scalable startups. entrepreneurship to the business ecosystem,

188 Raúl Diez Canseco Terry Peru: land of opportunities 189 strengthening and giving visibility to startups and 4. BIOSTARTUP: UNDERTAKE DIVERSITY (2015) internationalizing technological solutions. This is a PROBIDE contest, also carried out with the help of San Ignacio de Loyola University. BioStartUP arises  The Peruvian Seed Money Association (PECAP), from the convergence of two factors: the great Peruvian which gathers the main agents of the Peruvian biodiversity –with its abundant flora and fauna – and innovation and entrepreneurship ecosystem, the arrival of the Fourth Industrial Revolution or Industry which aims to the creation of angel investment and 4.0, a world in which machines interact among them and seed money mechanisms, collaborating with State where robotics, genetic engineering, telecommunications, Entities to promote growth. industrial design and artificial intelligence merge. Three incubation and acceleration programs: StartUp With BioStartUp, PROBIDE enters a new stage aligned USIL, Biostartup and Acelérate Open Future. with the new technological times, seeking to develop a  The support of INNÓVATE PERU to help in money new incubation line that supports new enterprises that seed funds management raised by startups in the develop products or ingredients based on the variety of SartUp Peru and Reto Bio programs. national species. The different editions of the competitions correspond to a Achievements: 2014 – 2019 current business line: bio-business, with products linked to nutrition and esthetics based on natural products.  19 open calls for accessing the different incubation This type of products have unique, privileged conditions and/or acceleration programs. in Peru. With BioStartUp, technology values and shows  Accompanying 127 startups with over 1800 Peruvian resources to the world, with a business model mentorship hours through incubation and/or that seeks sustainability and the care for the environment. acceleration programs. In the same way, it gives development opportunities to communities that, despite living in the places where raw  Raising 9.4 million soles in investment funds for materials come from, still have low economic resources. projects in the portfolio. BIOSTARTUP 1G  Generating 592 new job posts: 318 for men and Financing: 274 for women. PROBIDE: 285450 soles (67.06%)  37 founders are women. GIZ: 140200 soles (32.94%)

190 Raúl Diez Canseco Terry Peru: land of opportunities 191 In 2016, PROBIDE launched the first BioStartUp contest  Bocados: Amazonian plants filter bags with anti- through its Business Incubator BioStartUp and the CEUSIL diabetes properties. (San Ignacio de Loyola University’s Entrepreneurship Center). This happened thanks to the support of Bio  Industrias Alimentarias Amazónicas: the elaboration Innova Peru, a Swiss Corporation – SECO and German of copuazú butter for cosmetic use. Cooperation initiative, Implemented by GIZ (Deutsche When the program ended, all seven ventures settled in Gesellschaft für Internationale Zusammenarbeit). It aimed the market presenting basic products, better sales and to strengthen selected entrepreneurs in the development new packages with a business model that adapts to social and growth of their projects in order to generate an and environmental demands. Frutiawajún and Shiwi environmental, social and economic impact in the country. particiaded in the Latin American Forum of Investment and This first contest was focused on ventures that developed Impact (FLII9, organized by New Ventures, which allowed products or ingredients for the cosmetic or nutraceutic them to associate with the international entrepreneurial industry from Amazonian plants. The project included the ecosystem. proper incorporation of good practices to access genetic resources and distribution of benefits. Seven entrepreneurs BIOSTARTUP 2G were selected among over 25 applicants based on rigorous, demanding criteria, such as environmental and economic BioStartUp – second generation (BioStartUp 2G) was a sustainability, the entrepreneurs’ capability, their business contest that encouraged entrepreneurs in their projects’ model, the innovating merits and the market potential: development and growth as well as their social and economic impact on the country. This second edition  Neoecological: natural matico and quinoa face cream. supported the incubation of startups that developed products and/or services based on the sustainable  Casa Vértiz: intimate hygiene soap with dragon’s management of Andean forests in Peru. blood. Mountain ecosystems, particularly Andean forests, play a  Frutiawajún: elaboration and trade of ungurahui oil key role in ecosystems’ goods and services: they regulate for cosmetic objectives. climate and water, they mitigate floods and draughts, they protect against erosion, they mitigate greenhouse  Shiwi: lip balm with aromatic oils. gas emissions and maintain the habitats that allow the permanence of biodiversity.  Camino Verde: Tambopata Amazonian essential oils.

192 Raúl Diez Canseco Terry Peru: land of opportunities 193 Understanding the benefits of Andean forests and their The program had the support and the experience of role in local and national economy as well as their potential strategic allies such as the Andean Forest Program, for adaptation and mitigation of climate change and the an initiative by HELVETAS – Swiss Intercooperation – development of productive activities leads us to face the CONDENSAN, which has COSUDE funds. The finalists were: marginalization challenges these forest are currently going through.  Bayas Peruanas (wild berry recollection, production and trade – Andean blueberries). BioStartUp second generation (BioStartUp 2G)’s main goals were:  Evea Ecofashion (the manufacturing of hevea shoes and accessories by the community).  Boosting businesses that seek to innovate or improve services and/or products based on the  K’allampas (recollection, production and trade of sustainable management of Andean forests, Andean edible mushrooms). considering climate change.  Llama Pack Project (valorization of llama breeding  Highlighting the role of Andean forests in the and promotion of llama use as a pack animal in adaptation and mitigation of climate change so touristic areas in the high Andes). they contribute to the resilience of both peoples  Wais (filering bag and ready to drink energy drink and ecosystems, integrating them in a sustainable based on “wais” processed leaves) development context. All five finalist companies entered an incubation/  Propitiating the creation of viable economic acceleration program, accessing sustainable commerce, alternatives based on Andean forest ecosystems’ business model, value chain, financial and legal issues, goods and services. marketing and sales in international market, and benefits  Supporting the articulation of value chains based of adaptation and climate change mitigation services. The on the sustainable management of Andean forests. winner was Evea Ecofashion.

 Stimulating entrepreneurs’ innovation and BIOSTARTUP 3G creativity aimed to contribute the country’s efforts BioStartUp 3G supported the incubation of ventures that to reduce deforestation and forest degradation. develop products from the southern region of Peru for cosmeceutics, nutraceutics, sustainable tourism and super

194 Raúl Diez Canseco Terry Peru: land of opportunities 195 foods sectors. Superfoods are foods with a high nutritional value, such as quinoa, maca and kiwicha among others.

The call for the contest was aimed to Arequipa, Cusco and Madre de Dios, and it was oriented towards startups and businesses. We sought the organizations or ideas that develop products or services from the sustainable management of ecosystems in those regions. Its goals were:

 To boost the creation of businesses or business models based on biodiverse services and products from the south of Peru.

 To highlight the country’s native biodiversity, considering biocommerce’s principles and criteria.

 Creating economic alternatives from products and services that come from Cusco, Arequipa and Madre de Dios.

 To strengthen the value chain of the companies’ products.

 To implement good access practices to genetic resources and profit distribution.

 Supporting the implementation of innovative and financially, socially and environmentally sustainable business models that are oriented towards the creation and development of sustainable businesses.

196 Raúl Diez Canseco Terry Peru: land of opportunities 197 Six finalist projects were elected, which entered an ventures participated in an intensive incubation program, intensive startup formation program, with feedback from with feedback from specialized mentors. The winners specialized mentors and the participation in a BioDemoDay participated in a biobootcamp. There were mentorships with the designated jury at the end of the program. and coaching, access to investment networks and contact with the ecosystem, which allowed them to boost their The program lasted for six months. The contest was startup or business model with innovation and technology. divided into two categories: businesses and ideas. The Finally, the winners were prepared for their participation in first category considered the commercial aspect and the Biodemoday with a jury that selected the two winners in use of mentorships. The second, the impact of the idea both categories, which prizes were: on society. For the ideas category, the winner was La Clotilde, from Arequipa. It received 3500 soles as a seed  Ideas category: 3000 soles of seed money for the money prize in services for the development of a basic development of their minimum viable product or viable product. For the business category, the winner was service, backed by an agreement both parties signed. Cusco Mara, from Cusco. They grow and sell quinoa and won an internship visiting the entrepreneurial ecosystem  Business category: an internship to visit the of another country in the region. entrepreneurial ecosystem in another country within the region. In this category, Hawakur, a company from Madre de Dios, supported by the Association for the Conservation 5. Sustainability of the Amazon Basin and the Vicerectorate for Research, USIL has the potential to significantly contribute to finding presented a project to the Fondecyt of Concytec and won a solution to the most basic problems of society through a 500000 soles prize, which they used to buy machines the execution of the duties established in the University and accessories for the extraction of sinami oil. Law. Said norm, which passed in 2014, demands that universities give 2% of their institutional budget to social BIOSTARTUP 4G responsibility activities. This social mission has represented The fourth generation of BioStartUp supported the a brilliant opportunity for the design and development incubation of ventures that developed products or of a new University Social Service Model, with specific services in the interior of the country and are a part of initiatives and a wholesome strategy for the sustainable the agricultural and food value chain (AGRITECH) in development of rural communities under a territorial and the food, sustainable tourism and sustainable cuisine multidisciplinary approach, using the different professional sectors. Between September and November 2019, ten programs and specializations USIL has to offer.

198 Raúl Diez Canseco Terry Peru: land of opportunities 199 Sustainability and social responsibility programs and startups carried out by USIL link the academic to society through three main university functions: extension, articulating efforts and generating synergy between organizations; research, by performing impact studies and systematizing good practices for the design of better interventions; and teaching, through the development of skills that allow the self-sustainability of the communities. At the same time, they involve the students so they strengthen their formative skills and commit ethically to the service of society.

After Occopata’s sustainable development Occopata is a rural community 40 minutes away from Cusco city center, in the Santiago district, Cusco province, at 3941 meters above sea level. It has 900 inhabitants, a health post and three educational institutions: IE N° 216 Occopata preschool (41 kids), IE Virgen del Carmen de Occopata primary school (75 kids), and Alternation mode Wayakunaq Yachaywasin High School (120 kids).

Occopata’s economy depends almost completely on its native potatoes, because 600 varieties grow in its territory. The rest of agricultural activities are mainly for personal use. However, during the past few years, some greenhouses have settled there for growing strawberries and flowers.

Potatoes are appreciated in Peru and around the world. As important as being the true guardians of native potato is, Occopata has different difficulties that PROBIDE wants to

200 Raúl Diez Canseco Terry erase, joining forces with the State, the private sector and  Trash Challenge in Occopata, where the the educational sector. community, students, international volunteers and administrative workers, and the District City Hall of The main difficulties in the community are the high Santiago participated, cleaned and encouraged the prevalence of anemia, the low quality of water, proper management of residues and environmental overcrowding, the poor management of solid residues and protection. the limited conditions and capacity for generating income. The goals of this great sustainable venture are very wide:  Celebrating the Occopata-USIL Christmas. This event included integration activities performed  The incorporation of an entrepreneurial spirit in by San Ignacio de Recalde School teachers and Occopata’s women weavers, promoting their team students, a Christmas carol contest in Quechua work and search for new products and markets. and Spanish, whose winners travelled to the Sacred Valley of the Incas.  Visibility of the community on written and audiovisual media, as well as social media.  Incidence in the local government for the construction of 54 community greenhouses.  Helping to renovate the community’s preschool.  The elaboration of a formula and a prototype for  Creating a graphic commercial identity, designed iron fortified potato bread in order to fight anemia. by the Gabarrón Foundation, as the result of an artistic workshop with Occopata children.  Development of community rural tourism in Occopata workshops: i) tour coach, ii) food and  Installing garden centers and water filters in the drink services, iii) tourist accommodation. IE N°216 preschool and the Virgen del Carmen primary school, which was done in conjunction General achievements: with the NGO 33 Buckets.  Multidisciplinary participation and work by  The implementation of a psychomotricity classroom collaborators from over 20 different undergrad and the renovation of the kitchen at the preschool. programs, administrative areas and three corporation educational units.  The implementation of the library and improvement of the dining room and kitchen in the primary school.  The initial design of over 60 intervention initiatives based on the experience and field of the undergrad programs, thus creating teaching challenges.

202 Raúl Diez Canseco Terry Peru: land of opportunities 203  The implementation of actions under the learning- Cuisine is one of the GWR’s categories and one of the service model. emblematic USIL programs. It is also the element that allows us to show our professional training offer and to  Occopata Living Lab model, designed to contribute contribute with the development of the communities to the community’s needs, aligned to its Sustainable involved in each GWR. Development Goals with a multidisciplinary approach. The cornerstone of each one of USIL’s records is a Peruvian food product, or a food product which presence is very  Internships and volunteering for San Ignacio de important in this country due to tis nutritional qualities Recalde and University students from the Music, and potential impact on the sustainable development of Business Art and Design, Tourism and Nutrition the community where it grows. This way, every try seeks USIL programs in educational and health institution to highlight and promote Peruvian farmers and producers’ for the training of villagers. work, and to suggest solutions that will improve their quality of life and ensure the sustenance of the next 6. The University of Guinness Records generations. Throughout a dynamic, constant transformation that adapts to current times and always looks forward, USIL After the star product is chosen, and demonstrating seeks to influence the social and economic development of our national cuisine’s unique flavor, USIL chooses a Peru and to promote Peruvian human and natural resources Peruvian dish that, when made in a large scale, will lead around the world. In that sense, the Corporation started a to the breaking of a world record. Every adventure in the worldwide venture in 2015 in order to beat world record quest for breaking a record mobilizes a multidisciplinary through the famous Guinness World Records (GWR), a team from the university that includes chefs, engineers, prestigious international institution that has been officially researchers, communicators and nutritionists who, with registering new records in multiple categories for the past great enthusiasm, join synergies in order to surprise the 63 years. It shares with USIL values such as integrity, world with a new, tasty, nutritious and very Peruvian passion, detailed research and inclusion. Guinness World Record.

The global impact that beating a Guinnes World Record During the test, the USIL team is supervised by GWR means, as well as GWR’s trust and exigence for their judges in every step of the preparation process, so official events are a golden opportunity for showcasing they with the high process and product standards the USIL and Peru to the world. international institution demands.

204 Raúl Diez Canseco Terry Peru: land of opportunities 205 Thus far, USIL has beaten nine GWR with the priceless support of government authorities (city halls and regional governments) from the cities that hold each challenge, creating world visibility and sparking the initial flame for future growth and progress opportunities that benefit everyone involved.

All Guinness records USIL has obtained thus far are: the world’s largest quinoa salad (Miami), the world’s largest rocoto relleno dish (Arequipa), the world’s largest olive salad (Tacna), the world’s largest causa rellena (Cusco), the world’s largest chocolate degustation (Pucallpa), the world’s largest aguaje fruit mazamorra (Iquitos), the world’s largest degustation (Ica), the world’s largest artichoke salad (Trujillo) and the world’s largest cebiche degustation (Callao).

206 Raúl Diez Canseco Terry IX THE PERU WE WANT ichael Porter, professor and director of the Harvard Institute of Strategy and M Competitiveness, considered a strategy theory and competitiveness guru, said in the ‘90s that a nation obtains wealth though the generation of products and the way those products are obtained. He added that the microeconomic environment depends on four factors that determine the quality of life in a country. Well, so far, his fundaments have not changed:

 The existence of high quality materials (qualified, specialized work force, capital, infrastructure).

 High quality clients. He claims that, if the client is tolerant and does not discriminate, a country cannot be efficient.

 A climate that celebrates competition with fundamental pressure for productivity and innovation.

 The construction of a group environment, because no company can maintain itself in isolation.

Peru: land of opportunities 211 During his last visit to Peru in October 2011, this prestigious economist said our country has the chance to be a world leader in economic growth with social inclusion in an international crisis context. He also highlighted the growth opportunity for national companies to apply the “shared value” issue, where all businesses can grow and society is included in environmental, poverty reduction and other social criteria. “In order for this to happen, Peru has to be more competitive and allow the private sector to grow more rapidly”, he said. Also, he claimed that, the best opportunities to grow in a country usually come from the fields where its experience lies. In Peru’s case, it is oils and gas, meaning the petrochemical industry.

The main issue for Peru are the commodities’ prices, to make them reach a lower price for a lower demand. This is why Peru needs to emphasize their economy beyond mining and gas, so the impact of commodities’ price oscillation will be reduced, he suggested back then. For this process, the business person is the main agent of competitiveness. Of course, an efficient action depends on many factors but, whatever they are, the game will always be determined by business people’s maneuverability and skills.

Then, why are there not enough jobs if we have such entrepreneurial potential? Until the end of the ‘90s, the answer was simple: a business did not grow enough due to the lack of clear policies, the absence of leadership and an obsolete industrial development model that couldn’t face the aggressive globalization process. The political teachings and the values they represent in my life went hand in hand with Fernando Belaunde Terry and Violeta Correa, who lived by them with honor, loyalty and decency. After almost 30 years, we are going through a relative economic growth process, but what creates controversy

212 Raúl Diez Canseco Terry is not the free market or the democratic system: it is the This will be possible if there is the criteria in Peruvian State’s growth and development model and the businesses people’s mission and vision are the same and also coincide malpractices. It is obvious that, besides the international with action, particularly when it comes to wealth creating market’s favorable conditions for our export products – agents: the State and business people. mining, agricultural and marine – the country shows a relatively sustained economic growth within a democratic It is essential to have a government-business strategy regime. However, the new challenges of Peruvian that boosts comparative advantages in sectors with a economy are competitiveness and innovation in strategic high technological level and an important human capital in management, as well as the development of comparative order to increase productivity levels. We need to establish advantages in its products and services. In that sense, a virtuous circle formed by sectors and products with creativity and technology are still significant factors for the potential competitive advantages that meet the markets’ generation of value, particularly the exporting industrial and international consumers’ requirements. system. Due to its capacity to absorb human resources, its This way, in the twenty-first century, citizens must show participation in de GDP and its main role in the conquest of the capacity to adapt to changes and defeat conjunctures, new markets, industry will become the motor of national expecting the same of their governments and their political growth and the paradigm for innovation. and business leaders. This is why we must strengthen the How to make of Peru a competitive, prosperous, conditions for businesses to thrive and the entrepreneurial entrepreneurial nation? I dare suggest the following actions: culture to internalize in every level in society; thus we shall have a high competitiveness in the international market in  Having a global vision of the country and the way a reasonable deadline. the world works, a vision that must be shared by all the collectivities that form the nation’s social tissue. The challenge is to revalue our natural resources –we have them all along national territory- and develop and  Carefully handling the macroeconomic variables and increase competitive capacity of our companies linked to implementing realistic policies in the socioeconomic the international market. sectors that allow the transformation from a primary economy –the exploitation and export of Strengthening and maintaining local, regional or national raw materials to an internationalized economy with competitive advantages is key to facilitate the State and a high added value and a sustainability approach. businesses’ task. Competitive advantages are those visible or hidden forces that allow a region or country to The basic condition for a development model to succeed is obtain wealth from their prosperity sources, which their that it can be implemented with a good institutional design. competitors do not have. I quote Michael Porter again:

214 Raúl Diez Canseco Terry Peru: land of opportunities 215 he says that wealth is guided by productivity or the value with other activities, which creates products with more created in one work day for every dollar invested and for added value. Finland continues to export sawn timber, the unit of physical resources used by a nation. construction products and furniture, pulp, lignin, cardboard and paper. “Progress depends on the improvement and specialization of local production factors: the sophistication of local In the ‘90s, a study in Peru (Monitor Group, directed by demand, in order to help local producers anticipate and Porter), identified that the agricultural industry, textile meet international needs; the triggering of local rivalry industry and tourism are the comparative and potentially under more advanced competitive dimensions and; the competitive advantages we must exploit. Thirty years creation of related company and industry clusters. from that, we have the appropriate physical resources and weather conditions for the agricultural industry and Porter claims that, in some countries, those clusters were the other sectors to become our economy’s competitive formed from the exploitation of a natural resource, but it advantages. was the development, investment and innovation in other similar areas what boosted different, more profitable Let’s review our potential resources: activities which are now their main income source. An example of this is Denmark, which has milk and cattle Educational reform complexes and manufactures the equipment necessary for The tool that will allow us to walk the path of success is these activities. Also, Canada and Australia, which mining education. First, we have to accelerate the educational complexes do not only extract and process minerals, but reform that is already taking place through the also produce equipment and specialized services, and improvement of school management and a modernization the Netherlands, where there are conglomerates that of school infrastructure, which includes the reduction of a produce and trade flowers. These complexes generate gap of 10% of the GDP in this sector. This means that, in such solid activities that, many times, they outlive the order to place value on this economic potential, we need disappearance of the natural resource that originated to restructure our educational model, developing a critical them. For example, mining in Finland originated a large and productive thinking in our children and young people, mining equipment manufacturing industry. Finland also until both the public and the private sector start investing created a forest activity cluster. In order to do this, they in research and development policies. use their comparative advantages: large forest plantations, reserves, and their closeness to the ocean, which allows We need a new approach to improve basic reading, writing reducing transportation costs. As it became a more mature and mathematical skills, as well as the access to higher industrial complex, forest activity allowed the association education access for low-income students and those who

216 Raúl Diez Canseco Terry Peru: land of opportunities 217 live in rural areas. This is the case for Beca 18, which has helped thousands of students from the poorest regions of the country.

Our country’s investment in research, innovation and development is very low compared to other countries in the Organization for Economic Co-operation and Development (OCDE). Israel invests 4.3% of its GDP in research and development; we invest only 0.4%.

We need to create a national strategy: the creation of funds and the concession of tax benefits for innovating companies. Patent registration is an indicator of the effects of science and technology, a sector in which Peru has deficient results. Chile and Colombia respectively almost triple and double the number of patents registered.

Accumulating productive knowledge is hard. Thanks to the interaction with digital technology, today we can encourage mental processes that were not that easily activated before, and that can facilitate the creation of productive knowledge. Today, we have a series of cognitive instruments that are strongly linked to the art of critical thinking.

The future is today, and its speed is exponential. Dreaming with becoming a more prosperous society entails the building of interactions, networks, communities and institutions that will allow us to share knowledge The tool that allows us to walk through the path of success is education, first, by accelerating the education reform through the improvement of school and experiences. This is always easier from digital management and the modernization of school infrastructure. This translates as environments. My vision of Peruvian education for 2050 a smaller gap that represents 10% of the education GDP. is concrete and ambitious: to make the largest amount of

218 Raúl Diez Canseco Terry Peruvians generate productive, complex and sophisticated health: 1) the persistence of transmissible diseases, 2) knowledge, so they can create a better quality of life for the ageing population, 3) chronical diseases, 4) emerging themselves and the country. risks: overweight, obesity and child malnutrition, physical inactivity, 5) the “epidemic” of deaths caused by traffic Health reform accidents, and 6) the preparation for a quick response to The health of Peruvians is linked to human development, natural disasters. economic growth and competitiveness in Peru as a State- In Per, we have a fragmented, segmented National Health Nation. It is particularly important now, when Peru is System, formed by the Ministry of Health, Social Health among the countries with medium-high income. Insurance (Essalud), Armed Forces’ Health, the private From a health point of view, the main problem is inequity in sector and a public/private sector: SISOL-Salud and health medical attention. Therefore, enlarging the coverage and providing entities. the access to safe, good quality health services must be In general terms, we can say that our health system is still the cornerstone of the next governments. inefficient and inequitable. All of these subsystems can The national health system has still an endemic crisis, become a high-performance institution in a competition despite the efforts for its modernization and reform. The and collaboration context, offering individualized attention current government has acknowledged the situation and and developing a first level of attention with solving declared emergency measures first, in Lima public hospitals capability which is connected to polyclinics, general and, second, in first level medical attention centers. hospitals and specialized national hospitals.

The Ministry of Health must improve the governance in The priorities of productive investment in health must the sector with a health policy and strategic vision based focus on two main issues for the improvement of this on values, evidence and the rational use of resources, sector. First, the closing of infrastructural gaps through with a transparent management, rendering accounts, the construction of community health centers, polyclinics being responsible for their actions and seeking for citizen and general hospitals for an efficient first level attention. participation. Second, to close the human resource gap and offer an efficient management of health services nationwide. The strengthening of the rectory in public health is the most important challenge the Ministry of Health is facing. Clean water Right now, we must develop the institutional capabilities As a country, we have some unique assets. Peru is one fo to face the great trends that define the situation of the countries with the larges hydric offer in the world: we

220 Raúl Diez Canseco Terry Peru: land of opportunities 221 are number 8 in the ranking of countries with more water. We have over 2 billion cubic meters of fresh water in our territory. This is 1.89% of the planet’s water reserves. The problem is that a lot of this water ends up in the ocean.

During my most recent travels through the northern coast of Peru, I was able to see in situ the everyday effects caused by the El Niño phenomenon, and I witnessed the impotence of our national, regional and local authorities to face it. We always talk about reconstruction and we offer alternatives for the mitigation of El Niño’s devastating effects on infrastructure and farmlands, but we don’t talk about making decisions for stopping such effects from ever happening in the future.

Climate phenomenon – rivers growing, colossal downpours, floods – are a cyclic, recurrent reality. We know that, in a few years we will have climate anomalies again, and that they will become mora and more frequent. What we need, then, is to have a Climate Change Authority, a high-ranking official with power who does not only work in reconstruction, but also in prevention. It will become worse over time; we cannot stop climate change, but we can mitigate its effects on the economy. One way to do this is creating five-year plans for, for example, channeling the coast rivers that overflow because of El Niño.

Our ancestors were able to manage water through From a health point of vue, unequal attention in hospitals are the main problem. Therefore, a better access to safe, good quality health services must be the channels, dams and platforms. They mastered a wild, cornerstone of the next governments. difficult geography that, according to some historians, fed between 12 and 20 million inhabitants; one of the country’s strengths is agriculture.

Peru: land of opportunities 223 Agriculture and forest resources the world’s biodiversity. We can produce almost everything Only 16.8% of Peruvian territory is used for agriculture. most of the year, whereas, in other places, they cannot due Approximately 28% of permanent farming land have any to climate reasons. kind of irrigation. The rest of them are drylands that get These climate characteristics put us in an advantageous watered when it rains. situation compared to Europe, North America, China, Another asset that goes unused are forests. More than half Russia and other regions. Our Amazon is a living laboratory of the territory has this type of ecosystem. We have 10 where we can install research and development centers, million hectares with potential for forest plantations. We putting ourselves at the forefront of biotechnology and are the second country with the most Amazonian area, genetic engineering. We can also create and chain the ecologic lung of the planet, after Brazil. If we handle specialized and highly productive clusters through forest plantations with a long-term strategic vision, they production and development centers and technological can promote investments, generate jobs and wealth in the institutes in different regions of the national territory. interior of Peru, as well as reducing the pressure due to The founder of the Life Sciences Project from the Harvard deforestation and restoring degraded areas. Business School, Juan Enríquez, claims that the genetic Chile has 2.8 million hectares of plantations that create revolution is growing three time faster than the digital nearly 800 thousand jobs in the forest sector, and it exports revolution. Peru is one of the largest germplasm centers almost 6 billion USD. Brazil, with 6.5 million hectares of of flora and fauna; it is one of 12 countries with mega- plantations, has a positive commercial scale that reaches diversity and it has around 50 thousand plant species, 57 billion and employs 5% of its economically active 1200 of which are wild. Could we use this natural capital people in direct and derived jobs. to become a privileged country and boost biotechnological development in Peru? Of course we could. Could we do Currently, Peru has granted 7.5 million hectares of this in other areas? Yes, we could too. permanent production forests in concession. However, nearly 43% have been reverted due to the ending of the Food for the world concession and the ineffectiveness or non-compliance of Five centuries ago, we brought the world foods that saved managing plans, according to the National Wild Forest humanity from hunger, such as potatoes and corn. Quinoa and Fauna Service. was domesticated in our lands thousands of years ago, and now it is a part of astronauts’ diets and it has conquered Biodiverse country the most demanding palates. We have over 3800 potato Of all 34 climates the Earth has, Peru has 28 in its many varieties, 1200 domesticated edible plants and over 1400 levels of altitude. We are one of 12 countries with 70% of medicinal plants.

224 Raúl Diez Canseco Terry Peru: land of opportunities 225 Only 16,8% of Peruvian territory is used for agriculture. Approximately 28% of farmlands have some kind of irrigation system. The rest ar drylands, watered only by rain. Peru is a leader in the agricultural activity sector due to the positive effects of the soil and the sun. Lets’ see some examples: for every hectare of grapes, we have 21 tons of grapes, whereas in Chile they only have 12. For every hectare of avocado, we have 11.5 tons, when in Mexico they have 10 and, in Chile, 5. The same thing happens with asparagus: 11.8 tons per hectare, whereas in the Netherlands they have 6 tons and, I Spain, 4.8.

In the year 2001, we exported a little bit over 600 million dollars in agricultural production. In two decades we have multiplied that number by 1’ and we have almost reached 7 billion dollars: our agricultural exports added 6647 USD in 2018, with fresh mangoes, frozen mangoes, processed vegetables, Cavendish Valery bananas, cacao grains, fresh asparagus, and grapes, among others. We export almost 2.5 billion dollars in fruit only (such as grapes, mangoes, citrus and berries, among others). Who would have thought that, some years ago, Piura would grow more grapes than Ica, one of the cradles of vineyards!

Peru also has 7.6 million hectares of land for intensive crops, but only on third is exploited. Only the coast region has 500 thousand hectares of the highest international quality for growing asparagus, tomatoes, grapes and vegetables. In Mages, there is a smallhold farming area –subsistence agriculture) and basic needs crops that do not qualify for exportation nor for the development of Peru is among the 10 world food providers, with products such as asparagus, large-scale production activities. We summon agricultural coffee, maca, quinoa, olives, grapes, avocados, artichokes, dry peppers, beans, businesses, where agricultural production, its industries mandarins and others. and associated services meet and form a significant part of the GDP, to make a difference compared to other nations. This way, Peru is among the 10 main food providers of

228 Raúl Diez Canseco Terry the planet, with products such as asparagus, coffee, maca, quinoa, olives, grapes, avocado, artichoke, dry peppers, beans, and mandarin, among others. In 18 years, our country has become a true “heavy weight”, a trusted provider worldwide.

An ocean with many species The ocean is a source of food security. According to the UN Food and Agriculture Organization (FAO), we have 220 hydro biological daily fishing species. 80% of those are fish, 17%, invertebrates and, 2%, other resources. Along the coast, there are almost 200 fisher coves which bring food to the markets, which, at the same time, bring food to the tables’ of all Peruvians. We are one of the largest fish floor producers. Our main buyer is China, followed by Germany, Japan, Taiwan and Vietnam.

Mining Between 2018 and 2022, 28 mining projects are prepared to begin. However, the main obstacles are social opposition, the low prices of metals in previous years, which delay advances, or the fact that the projects lack studies that guarantee and interesting return of investment. Best case scenario, in 2022, 10 projects will begin with a total investment of 15.74 billion USD, which will create more job posts.

Tourism In 2018, tourism was the third income generating activity in Peru, with 4.895 billion, after mining (27.7 billion) and agriculture (6.6 billion). Due to its natural and cultural diversity, there are different types of tourism in our country:

Peru: land of opportunities 231 adventure tourism, ecotourism, beach tourism, medical If we consciously value the results of our country’s aperture tourism, maritime tourism, business tourism, rural tourism to commerce, migration, capital flows and technology and luxury tourism, and all of them must be exploited for exchange, we will see an amazing progress in human the benefit of every region. We have identified 34 hotel development, a progression that the current generation projects for 10 billion dollars in the 2018-2021 period, in must not only maintain, but also increase. five regions of Peru. 17 of them are in Lima, followed by Cusco, Arequipa, Piura and San Martin. The current average income (6200 USD) has practically tripled in the past two decades thanks to the right Despite the importance of tourism in the creation of macroeconomic policies and the boom of raw materials income and jobs, its representativeness in the GDP combined with a better investment climate. However, we is calculated indirectly, gathering different activities, have a moral obligation to say that the benefits of economic such as accommodation, restaurants, financial services, integration and technological changes are not equitably entertainment, transport and travel agencies, among distributed. It is urgent to create better social protection others. In 2015, the Ministry of Foreign Trade and Tourism programs. In other words, the openness to commerce estimated a 3.9% of the GDP was tourism- related. does not guarantee success but, without it, Peru would Due to its transversality, this activity has competitive not be where it is today. Now, what does this mean for disadvantages compared to neighboring countries: Peru, which, despite the world crisis, is one of the fastest inadequate and insufficient transport infrastructure, low growing economies in Latin America? Do we have today a safety, social conflicts and a limited human capital. new chance to make this dream come true?

Our rich eco-systemic, genetic and biological assets I personally believe we do. But, the first task of the pilot that open a window of opportunities for new economic sector flies the plane called Peru must abandon the autopilot and that create jobs, such as eco-innovation, bio-commerce, make the decisions the emergency situation needs. The ecotourism, cuisine and the powerful culture and sustainable economic process of Peru must be looked at entertainment industry. through a multidimensional approach, with indicator that align to social and institutional goals which improvement is In spite of the dark veil that some experts claim is about to essential for a healthy, sustainable growth. This is because cover us, Peru must look the 2020 decade with optimism. we have clearer goals in the following sectors: Our country has grown a lot in the last 20 years, and this generation of young people has a more advantageous Investments and infrastructure situation than previous generations in pretty much every It is urgent to increase investments in transportation aspect. systems, telecommunications, energy, water and

232 Raúl Diez Canseco Terry Peru: land of opportunities 233 sanitation. We are living in a bubble of institutional In conclusion, people want public safety and economic paralysis and economic deceleration. The public sector has growth, as well as jobs in order to increase their income. over 800 paralyzed construction works that only need an accessible investment –a little bit more than 200 million In all of Peru, we have 1495 police stations, many of which soles- to put them at the service of the people. These lack the right equipment to offer an efficient attention to construction works have been completed in an 80%, but people; some of them don’t even have a landline or a radio are not ready yet because of a small detail regarding city to communicate. First, we need to understand that we are hall, the regional government or the national government. at war: a war against armed groups that have divided the The Controller General of the Republic has presented a territory and are becoming more violent every day. These draft bill that would allow to continue these construction are the problems that people perceive and that they expect works but, so far, nothing has been done to solve the problem. their national, regional and local governments to solve urgently. We must guarantee order and we must recover The expansion of the Lima Metro, which will allow a better te principle of authority. We need an efficient coordination connectivity and will reduce traffic, is a good example that work in order to combine the force of the National Police we can do things right. Another one is the construction of and the Armed Forces once and for all, and thus take care new roads that connect the coast to the mountains and of the main services and patrol strategic areas in the city. the jungle. These connections will have a favorable effect on the business sector and among consumers. Approximately 34 thousand young people joins the Volunteer Military Service every year. 80% did it in order Given the gap in infrastructure which, according to some to serve in the Peruvian Army. If only 20% of those young calculations, is the equivalent to 35% of Peruvian GDP, the people that are a part of the Military Police worked for country will need to increase tax income and improve the the National Police and were trained for complementary framework for public/private associations. actions, their role would be different than that of the Armed Forces and we would have a 7000 agent dissuasive task Public Safety force ready to patrol the most dangerous streets in the city When we ask the people what they think the biggest and put some order. This would come with a Public Safety national problems are, they say: economic problems (35%), Operational Plan which would include city hall cameras in crime (19%), and the political situation and corruption (9%). the district cameras and to the emergency number, 105. When we ask the same people what the main problems Fighting crime cannot happen in isolation; there must be are in their main district, community or neighborhood, this no frontiers when chasing delinquency. This is why, not are a bit different. In the neighborhood, the main problem long ago, Pueblo Libre, Magdalena and San Miguel city is crime (24%), followed by economic problems (20%). halls agreed to unify their guards, their radio and camera

234 Raúl Diez Canseco Terry Peru: land of opportunities 235 systems and their vigilance centrals. And on the hills?, you justice system, depending on the gravity or their crime: may be asking. The National Police doesn’t arrive to those immunity does not mean impunity. Parliament must have places. An you are right. Cars don’t get there. So, let’s enough autonomy elements. reinforce Motorized Police and lets put Mounted Police to work as well. Let’s reinforce a comprehensive patrolling. On the other hand, we need to eliminate preferential vote. Once and for all. I think that previous elections in political parties with the supervision of the National Office of Electoral Processes First, we need to regain our trust. Without trust, everything (ONPE) would be beneficial for the country. Authentic becomes more complicated. Trust is the base of institutions parties must have militants and not be shells for rent or for and, in the end, it is what supports a democracy. When sale to the best buyer. we need to end parties that start trust fades, desperate measures appear, as well as with a certain shade and change color with every election. populism, outsiders, who damage the country so badly. we need strong, transcendent parties, with principles, Second, it is time to instaure order and public safety in values, and that sustain their programs. order to continue to grow and generate job posts. Fighting corruption Political Reform The corruption phenomenon, which appears in many It is necessary to continue with the reforms that went ways in the political, social, judicial and economic Peruvian unfinished with the previous congress, such as the scene, affects governability, trust in institutions and Constitutional Tribunal (CT). We need, then, to find the people’s rights. the fight against corruption is, today, a most transparent, less politicized mechanism of CT, priority. The lack of trust that people have in politicians is because many issues related to the judiciary end up in the due to all the disappointment and frustration they have CT. The electoral political reform was also pending. My brought on people. Corrupt public workers denigrate the thoughts are that, if there had been a senate, it would have people’s dignity; for this, they deserve the worst possible avoided the rupture between executive and legislative punishment stipulated by the law, and a civil death given authorities. I remember that, during Alan García’s APRA by the people. We need a great institutional reform, government, bank standardization was quickly approved starting with the judiciary and the Public Ministry, because by deputies, but stopped at the Senate. APRA senators the law is equal for everybody and we are all under it, with themselves stopped it. Congresspeople must keep their no distinctions or privileges, but also without instructions parliamentary immunity because they must be secure in or vendettas. A law that is fair for everybody does not their legislative function. However, nobody should become allow societies to ensure eternal pleace, but the certainty a congressperson if they have pending issues with the that those who commit a crime must pay for it.

236 Raúl Diez Canseco Terry Peru: land of opportunities 237 We live a crisis if values where trust has been violated by Peru is a country of opportunities. fear of others. “Viveza” has replaced respect for rules, and honesty has been eroded by corruption. We must rescue We only need to start…paths are the three principles taught to us by our ancestors, principles made by walking. that have proven to become more necessary with time: Ama sua (do not steal), Ama llulla (do not lie), Ama quella (do not be lazy). In the new Peru, these principles force us to be honest, sincere and to work hard. Public servants, police officers, judges, lawyers, business people, but also housewives, young people, all of us who share this great house that is Peru, have the duty to not let down our future generations and to redouble our efforts to make our country a big, generous land. The frontal fight against corruption needs a joint effort from State institutions, civil society and the business sector in order to achieve an efficient, honest, inclusive public administration, as well as a people with an ethical value culture.

I am firmly convinced that we will make our prosperity dream come true thanks to the amazing energy and wit of young entrepreneurs, whose generation has an extraordinary opportunity to lead the transformation of Peruvian economy in the twenty-first century. Both the State and business leaders have the responsibility to make the right decisions and act in a way that will give opportunities to the bicentennial generation.

238 Raúl Diez Canseco Terry Peru: land of opportunities 239